Investment Planning

This means assisting the client in identifying his investment goals and formulating a strategy to meet them. The planner also helps the client understand his risk profile and then suggests an asset allocation accordingly. The planner also takes the client though the educational process, mainly on risk & return analysis and legal and regulatory requirements for the investments. Investment risk, which is also a part of speculative risk is also covered under Investment planning.

The asset classes generally comprising the portfolio are:

• Equity-mutual funds, shares, PMS & Private Equity
• Debt-FDs, Bonds, NCDs, corporate FDs and mutual funds
• Real Estate- residential & commercial property, REITs
• Commodities- Gold, silver, Agricultural produce etc
• Art- collectibles and funds
• Derivatives- F & O, managed futures funds
• Structured products

Risk Management and Insurance Planning

Risk management is a systematic approach for managing risk. The aim is to identify risk exposures that exist and then provide a means for the exposures, in the event of loss.
Risk management & insurance planning only considers Financial risk, more specifically Pure risk.

The process of risk management is:

• Identify risks
• Analyse and evaluate risk quantum
• Develop alternatives for handling risks- risk retention and risk transfer
• Choose & implement an appropriate strategy – Insurance planning
• Monitor and update

Retirement Planning

The strategic approach followed during the earning span of an individual to achieve the retirement objectives is called retirement planning.
It involves:

• Analysis of the available retirement benefits from various sources, e.g. the state, employer etc
• Dependency needs of self and other family members requiring continued income flow
• Anticipation of possible changes to the employment conditions, family circumstances and health requirements of the family members
• Decision on the savings pattern out of the present income to build the required corpus
• Selection of investment strategies on the basis of defined yield and rate of accumulation
• Analysis of risk elements and their quantum during the process
• Building flexibility for reshuffling of portfolio in case of a need arising.

Tax Planning

The arrangement of financial affairs in such a way that without violating in any way the legal provision of an act, full advantage is taken of all exemptions, deductions, rebates and reliefs permitted under the act, to reduce the burden of taxation on an assessee to the least.
There is a clear distinction between tax planning, tax avoidance and tax evasion.
Tax planning is done while remaining within the four corners of the act, whereas tax avoidance is a method of reducing tax incidence by availing of certain loopholes in the law. Tax evasion is a method of reducing tax incidence by making false claim or by withholding information regarding real income and is an illegal, immoral, anti-social and anti-national practice.

Estate Planning

It is the process which provides for the smooth transition and distribution of assets and liabilities, of an individual, at the most appropriate times, could be death or quite some time after.
Apart from dealing with after-death destination of assets and liabilities, it also includes, during the lifetime of the testator, moving assets so that there may be positioning of both capital and income benefits in a manner which fulfils the client’s wishes.
The objectives of estate planning are

• ample and appropriate provision for surviving dependents such as spouse and children.
• minimization of taxation liabilities.
• protection of estate for beneficiaries with special needs.
• succession of non-estate assets.
• meeting philanthropic ambitions.