Financial planning involves creating a systematic plan to meet financial goals by ensuring the right amount of savings and investments. It includes gathering client data, analyzing their financial situation, developing recommendations, implementing the plan, and monitoring it. The plan should account for different life stages like childhood, early career when earning and saving begins, marriage when protection needs rise, parenting when education is a priority, retirement planning, and intergenerational wealth transfer.

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2. Financial planning is a planned and systematic approach
to provide for the financial goals that will help people
realize their needs and aspirations.
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3.  Planning for Right amount of money at right time in
right hands.
 Creative an investment plan and asset allocation
strategy to meet financial goals.
 Reviewing the portfolio and revising the asset
allocation.
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4.  Creates a road map in terms what has to be done to
achieve the goals.
 Ensure that the financial goals of the investor
 are met by the right combination of savings and
investment.
 The current and expected income and expenses and the
ability to save and investment is reviewed.
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5.  Establish Client-Planner Relationship
 Gather Client Data, Define Client Goals
 Analyse and Evaluate Client’s Financial Status
 Develop and Present Financial Planning
Recommendations and / or Options
 Implement the Financial Planning
Recommendations
 Monitor the Financial Planning
Recommendations
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6.  Life Cycle Approach
 Wealth Life Cycle Approach
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7. Individual Passes through different stages in life:
Childhood Stage
 Children are dependents, rather than earning members.
 Focus is more on education.
 Pocket money, cash gifts and scholarships are potential
sources of income during this phase.
 Savings and Investment habits imbibed by parents
during this phase sets the foundation for life.
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8.  Earning starts in that stage.
 Income is very low at this stage.
 This is the right age to start investing in equity.
 Ideally 10-15% should save from the salary at this
stage.
 In this stage SIP in equity funds are desirable
investment option to young unmarried.
 Here the goals are short term or medium term like
purchase of car, marriage or purchase a house than we
can invest amount in debt.
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9.  Assets created by early savings provide a cushion while
taking up the responsibilities associated with marriage
otherwise as expenses are high its difficult to save money.
 Need to provide for emergencies and protect income from
death, injuries.
 Health and life insurance is important as protection needs
are more important than investment needed at this stage.
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10.  Insurance needs both life and health increase with
every child.
 Adequate investment are required to cover education
needs.
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11.  Huge cost associated with helping the children settle.
 Higher ability to save and invest because income levels
are highest.
 Focus on repayment of loan and saving for retirement.
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12.  Planning for how much amount required at the time of
retirement.
 Start setting aside increase amount to protect their life
style.
 Pension product and health insurance are preferred
choices for investors.
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13. Pension income or income from retirement corpus should
help meet regular expenses.
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14.  Accumulation stage
 Transition stage
 Inter Generational Transfer
 Reaping / Distribution
 Sudden Wealth
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15.  Accumulate and save for the long term.
 Choose growth oriented investment options.
 It covers phase to young unmarried to pre retirement.
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16.  Withdrawal of funds for some financial goals while
accumulating for retirement.
 E.g. house to be purchased, children’s higher education
/ marriage approaching etc.
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17.  During this phase, the investor starts thinking about
orderly transfer of wealth to the next generation, in the
event of death.
 The financial planner can help the investor understand
various inheritance and tax issues, and help in
preparing Will and validating various documents and
structures related to assets and liabilities of the investor.
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18.  This is the stage when the investor needs regular
money.
 It is a parallel to retirement phase of life cycle
approach.
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19.  Winning lotteries, unexpected inheritance of wealth,
unusually high capital gains earned.
 In such situations, it is advisable to initially block the
money by investing in a liquid scheme.
 An STP from the liquid schemes into equity schemes
will help the long term wealth creation process, if
advisable, considering the unique situation of the
investor.
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20. Q. 1 The National Pension System is regulated by ______.
a. SEBI b. IRDA c. PFRDA d. AMFI
Q.2 An investor under the National Pension System can
choose which of the following asset classes?
a. Equities b. Corporate debt c. Government Securities d.
All of the above
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21. Q.3 Providing funds for a daughter’s marriage is an
example of _______.
a. Goal-oriented Financial Plan
b. Comprehensive Financial Plan
c. Financial goal
d. None of the above
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22. Q.4 According to the Certified Financial Planner – Board
of Standards (USA), the first stage in financial planning is
_____________.
a. Analyse and Evaluate Client’s Financial Status b.
Establish and Define the Client-Planner Relationship
c. Gather Client Data, Define Client Goals
d. Develop and Present Financial Planning
Recommendations and / or Options
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23. Q.5 Investor can get into long term investment
commitments in ________.
a. Distribution Phase
b. Transition Phase
c. Inter-generational Phase
d. Accumulation Phase
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24. Q. 6 Distribution phase of Wealth Cycle is a parallel of
Retirement phase of Life Cycle.
a. True b. False
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