1. FINANCIAL PLANNING TOOLS & CA PRACTICE
CA ARVIND A. RAO
ARVIND RAO & ASSOCIATES
CA Arvind A. Rao
12/01/2014

2. “Trends and Insights into Financial Goals of Indian Consumers”
A study that examines attitudes and behaviors of a new class of upwardly mobile Indian professionals towards financial planning ~ by Ameriprise India : 2nd edition in 2013
Identifying leading financial aspirations of a fast-emerging population
Growing demand for professional advice to help them achieve their goals
CA Arvind A. Rao
12/01/2014

3. Key Findings
CA Arvind A. Rao
12/01/2014

4. 140 % increase in respondents rating retirement as a key goal
48% respondents mentioned family as their top financial priority
A 22% drop from 2012
Approx. 24% say retirement is their key priority (only 10% in 2012 said this)
Retirement given precedence over large-ticket family spendings like:
Buying secondary homes / cars
Traveling around the world
Youngest age-group years are giving increased importance to retirement
CA Arvind A. Rao
12/01/2014

5. Single women are focused on managing their money but marriage may change the dynamics
Single women feeling financially confident (70%) than single men (56%)
Invest earlier than men (25 years v 26 years for men) despite joining the workforce at the same age (24 years)
Marriage – shifts the trend ~ mens financial confidence increases, wife’s financial confidence decreases as they get dependent on their husbands for their financial decisions
Different approaches to investing
CA Arvind A. Rao
12/01/2014

6. Measuring financial intelligence
Do investors think about goal-based planning or investments made without aligning them to goals
Is investment portfolio diversified or focused on 1 instrument
Do respondents think long-term with their investments
Do they start investing early (avg age 26 years)
Do they take professional advice on financial planning
CA Arvind A. Rao
12/01/2014

7. Investors with higher income pay for advice and ensure a diversified portfolio
Follow a structured approach to managing money in long run
Higher risk appetite but believe in following a plan
Goals important ~ no compromise on current living standards
Invest less in deposits, more in gold, insurance, shares and bonds
CA Arvind A. Rao
12/01/2014

8. What does this mean for CAs?
CA Arvind A. Rao
12/01/2014

9. Focus on saving / better planning taxes – implies saving money - implies making money for clients
Our advice helps people save additional money – means greater resources at disposal to achieve their objectives or fulfill aspirations
The process of financial planning helps to fill this gap!! – additional value-add for clients
CA Arvind A. Rao
12/01/2014

10. Traditionally the function of financial planning was typically driven by the following factors:
CAs ~ seeking advice for tax-planning w.r.t. investments and insurance for tax planning
Insurance distributors ~ for life and general insurance needs
Post-office / brokers / mutual fund distributors ~ for investments needs
CA Arvind A. Rao
12/01/2014

11. Dynamics of the game ~ now changing
Product-pushing by banks and distributors have made clients wary of the ‘Sell’ model
Increasing emphasis on advice from ‘Trusted circles’ and ‘Professionals’
CA Arvind A. Rao
12/01/2014

12. SEBI – RIA : Game changer
CA Arvind A. Rao
12/01/2014

13. Most commonly understood as a sales service relating to financial products ~ provision of strategic advice
SEBI RIA ~ means only serious and professional people stay in the financial advisory business
The regulations is only one of the reasons why CAs should consider providing financial advice
Trends discussed earlier in the slides point out to the next emerging discipline in personal finance
CA Arvind A. Rao
12/01/2014

14. Additional source of revenue ~ fee-based advice is the future
Knowledge and In-depth understanding of client’s financial situation ~ CA well placed to offer services
Adding another dimension to your service lines to make it more comprehensive ~ financial planning
Additional source of revenue ~ fee-based advice is the future
CA Arvind A. Rao
12/01/2014

15. What is financial planning?
CA Arvind A. Rao
12/01/2014

16. Making money available when clients need it
Focus on customer needs and not product baskets
Focus on customer objectives and their life patterns
Anticipating the problems in life and strategizing for the same
Making sense of long-term, short-term and medium-term
CA Arvind A. Rao
12/01/2014

17. Prioritizing between needs, wants, aspirations and life-style needs
Balancing between saving for present and future
Balancing between spending for present and future
Meaning and context of financial planning changes with the client and his situation
ROI v. HOI
CA Arvind A. Rao
12/01/2014

18. TOOLS OF FINANCIAL PLANNING
CA Arvind A. Rao
12/01/2014

19. SETTING UP AN INSURANCE PORTFOLIO
CA Arvind A. Rao
12/01/2014

20. Life insurance ~ protection Disability insurance Critical illness
Medical policy
Health insurance ~ not sickness insurance
Pruning client’s insurance portfolio
Decision making ~ when to exit or retain
CA Arvind A. Rao
12/01/2014

21. LETS TALK ABOUT YOU
CA Arvind A. Rao
12/01/2014

22. Creating personal net worth Distinct from business needs
Making way for expansion and new partners
CA Arvind A. Rao
12/01/2014

23. MASTER PLAN
CA Arvind A. Rao
12/01/2014

24. Mapping investments to goals Maintaining life-cycle of investments
Setting up goal sheets
Mapping investments to goals
Maintaining life-cycle of investments
Creating dashboards for goals and client fulfillments
Getting discipline ~ is it about returns?
CA Arvind A. Rao
12/01/2014

25. SUCCESSION PLANNING
CA Arvind A. Rao
12/01/2014

26. Why plan for succession ~ Raja Harinder Singh case
Important for businesses:
Taxes
Risk
Control
Value
Designing and implementing the succession plan
CA Arvind A. Rao
12/01/2014

27. RETIREMENT PLANS
CA Arvind A. Rao
12/01/2014

28. Setting up the retirement nest-egg Planning milestones
Post-retirement corpus
Strategies for maintenance of the corpus:
Systematic withdrawal
Annuity model ~ capital preservation
Time-segmented allocation model
CA Arvind A. Rao
12/01/2014

29. HOW TO BEGIN?
CA Arvind A. Rao
12/01/2014

30. Referral ~ formulated agreement
Joint venture with an established professional ~ to work with the firm on a regular basis
Self-education
Referral ~ formulated agreement
CA Arvind A. Rao
12/01/2014

31. QUESTIONS
CA Arvind A. Rao
12/01/2014

32. THANK YOU ARVIND RAO (M) 98700 33370 arvind@caarassociates.com
CA Arvind A. Rao
12/01/2014