Trends, practices and outcomes of present positioning of financial planning and its future directions

Introduction

Financial planning is a process of integrating future financial goals to current funds and plan them accordingly to fulfill the requirement of corpus for the achievement of stability and financial strength. Financial planning is the core of any household or corporate business because it helps to plan our future and maintain soundness of finance. Every corporate or household will have different financial goals depending on their growth, income, expenses, investments, interests and etc. Financial planning is a tool to manage finance efficiently so that they can be used effectively.

The various financial goals of households/ individuals could be retirement planning, travel planning, education of dependents or self, asset purchase, investments, medical expenses and many more. The various financial goals of a business or a corporate could be expansion, diversification, promotional activities, employee benefit savings, merger/ acquisition, investments, asset turnover and many more.

Statement of Problem

Financial planning requires the long-term sight so that finances can be managed accordingly. According to the research, an article from Livemint.com on 25^th March, 2021, there were only 2000 certified financial planners in India and 2,00,000 across the world approximately till 2021. Also, financial planning is not considered as a main job role in corporates. It is either linked with private wealth management or equity research or asset management.^[1], ^[2], ^[3], ^[4], ^[5] Every individual needs to manage the money for a better and sustainable future and also to have funds in the times of emergency. But then, why is there such a huge gap between the demand and supply or financial planning?

Objectives of Research

To know the various objectives of financial planning

To know the reasons behind the gap the between demand and supply of financial planning

People’s perspective on financial planning

To determine the need of financial planning.

Scope of Research

Thus, this research is useful to the following parties:

Financial institutions

Financial service providers

Corporate houses

Investment advisors

Banks and corporates

Students

Academicians

Researchers

Data Collection and Research Design

For this research, questionnaire method is used to collect data from individuals and 55 responses have been received across different ages and professions. This research is descriptive in nature with analytical perspective and is conservative in nature because it only applies to earning age groups and very limited as the lack of awareness of financial planning.^[6], ^[7], ^[8]

Analysis and Interpretation

The first two questions were about the email address and name of respondents. We will skip these questions and continue with the next questions.

Test 2: Chi-square multi factor test

Q1. What is the percentage of salary you invest?

Q2. What is the average current rate of return you earn?

Level of significance: 0.05

Df = (r-1)(c-1)

Df = (4-1)(3-1)

Df= 3

Tabulated value: 7.815

H0: There is no significant impact of % of income invested on the rate of return

Ha: There is a significant impact of % of income invested on the rate of return

Result: Calculated value is greater than tabulated value

Interpretation: Null hypothesis is rejected. Therefore, there is a significant impact of % of investment on % of return.

Findings

The findings from the above applied tests can be that the investors are aware of financial planners, but they do not take help from the. That is, they rely on their own self or take help from unqualified advisors or brokers who do are certified financial planners.

Which means, that the awareness of financial planners should be increased and their assistance should be taken because from the result we can also identify that people have financial goals, but they are not serious and are not aware of the importance of financial planners in their money management decisions.

We also found that, return on investment depends on the rate of investment. That is, if more money is invested, more returns can be generated as the amount can be re-invested and the CAGR effect will lead to higher returns than simple returns in the long run.

Limitations

Only 55 people have responded to the questionnaire.

Limited area of reach.

Use of manual method to calculate the test results

Inaccuracy of responses due to lack of awareness.

Conclusion

The conclusion of the above research is that financial planning is a must to achieve financial goals and awareness should be created for its importance. Also, investors are interested in earning higher returns on their investments and thus, decisions are to be taken keeping in mind the needs and expectations of the investors.

Source of Funding

None.

Conflict of Interest

None.