Goal Based Financial Planning

What is Goal Based Financial Planning In India?

goal based financial planning in indiaGoal-based financial planning in India is a method which allows clients to save for various financial goals in different time horizons. The planning process helps describe a person’s or family goals, gives them priority and determines the best way to get them funded – considering both tangible and non-tangible assets, and how they affect each other. It gives more flexibility to the investor to adjust for life and market as well.


The Benefits of Goals-Based Financial Planning In India.

The benefits of this approach are many and there is not enough space available to add them, but some of the important things are-


The objective with clarity – The nature of the process encourages the client to think seriously about what they want and then it explains. This will enable the client to better understand their goals and priorities


Good alignment of assets for future responsibilitiesThe goal priority is to allow advisors to split it into separate belts and take advantage of different risk profile and time horizons and individually optimize sub-portfolio and maximize the efficiency of everyone.


Reducing emotional decisions– Understanding the needs of the clients provides advisor and client with a concrete objective. Keeping the goal reduces the chances of consumers responding to market fluctuations. If they are working towards a goal then they do not follow the returns can leads to minimize the emotional decisions.


Advantageous mental accounting —   Names of goals are generally considered to be prejudices. Although the money in the portfolio is extinguishing, it is encouraged to save clients when they see progress in their personal goals.


Wealth Optimiser:-It has been proven that people who work for specific things work well enough. Using the goal based method of  financial planning , the average alpha in the portfolio can grow up to only 1.65%, according to a survey. An investor is measuring how much satisfaction the investor gets from reaching his goal. By taking the average utility in different target-based portfolios, economists can place a number on the value of individual intent completion, which is bigger than saving just for retirement savings. This formula can help the advisors to determine which objectives to follow and how to fund them.


Closer Client -Advisor relationship — A closer relationships between client and their advisors get good results. The goal-based plan facilitates healthy communication from the beginning and on a regular basis. An open, trusting relationship engages both parties.


How does Goals-Based Financial Planning Works?

Unlike traditional financial planning and investment, the client’s portfolio is not managed as a singular portfolio. Instead, these are broken into sub-portfolios which are dedicated to individual goals. That sub-portfolio are optimised according to risk appetite and time horizon. In addition, risk, performance, and growth are not measured against volatility, benchmark and returns only, it is measured by the progress against the achieving the goals.


Defining Goals –

The first step in goal-based financial planning is to define customer’s goals and priorities. This process gives the client the opportunity to think deeply about what they want, when they want it and what they need to do – they provide them with greater clarity of purpose. On the other hand, the advisor gives a good understanding of clients’ current financial pictures in relation to the wishes and financial needs of the client and allows for the implementation of a financial plan which is unique to each client.



Creating the financial plan –

Once the client’s objective has been fixed, advisor and clients can work together to develop a financial plan. Every goal “bucket” becomes a place where it is a good place to achieve the goal. Optimal asset allocation This goal profile – Risk capacity and time is determined by the horizon – and how it works with potential competitor financial objectives. The wide-ranging form of goal-based perspective is also considered intangible assets. Only client’s tangible assets are not important – their jobs, positions, housing equity, age, pension / social security, insurance etc. are also considered. This is different from traditional financial planning, which generally only considers liquid wealth and makes a good plan with the firm foundation.


Executing the financial plan

There are two important parts to implement the goal based financial plan and keep both , client in the center – Initial Search, Definition and Implementation and Maintenance of timely plan. To maintain the alignment of plans for the customer’s goal, a credible relationship is necessary. This relationship is the central of a goal based planning philosophy because the plan is to change life, to be fluid. To make it effective, advisor and clients must actively engage and communicate with each other. The client must follow any life or goal change accurately and the advisor must track the progress made to the customer’s objectives, adjusting as necessary.


Holistic view of portfolio –

Traditional planning does not think that different objectives compete for the same money and yield results at different times; It is expected that the investors will take a lump sum and are giving themselves to today and after retirement.It is not advisable to come to the planning, either there may not be too much or sufficient risk, because the advisor is investing in the portfolio that is not for a personal target, to get a return level. Targeted planning: Objective funding with optimum asset settlement, to pursue returns or to discourage competitive segmentation – Can not compare goals.

Financial Goal Calculators

Child Education

Child Marriage

Retirement Planning

Dream Home

Wealth Creation

Dream Holiday