Difference Between Financial Planning and Portfolio Management

Difference Between Financial Planning and Portfolio Management

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Planning Finance or Managing Portoflio are not similar things. Talking about financial planning, it is a detailed-method of developing overall financial goals and creating a plan of action to achieve them. So there is big diffrence betweeen Financial Planning and Portfolio Management.
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Published 02 January 2020
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Language English
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DIFFERENCE BETWEEN FINANCIAL PLANNING AND PORTFOLIO MANAGEMENT
M U T U A L F U N D S , I N S U R A N C E , F I N A N C I A L P L A N N I N G
Investments and Financial Advising
INTRO
Financial planning and portfolio management are one
of the most popular concepts which come to our
mind. They are often the answer to the various
questions such as how much should be saved for
important things like retirement, child’s education and marriage etc. Since these terminologies are interrelated, they are often used inter irreplaceable, however this is not the case. There are a lot of differences between the same.
F I N A N C I A L P L A N N I N G V S . P O R T F O L I O M A N A G E M E N T
01
F I N A N C I A L P L A N N I N G V S . P O R T F O L I O M A N A G E M E N T
02
Talking about financial planning, it is a detailed-method of developing overall financial goals and creating a plan of action to achieve them. It is also called wealth management as it provides you a workable framework for designing and achieving your life goals in a systematic manner by preparing for shocks and surprises. It encompasses essentials financial details about your income, savings, debts, investments, insurance, etc.
W O R L D O F P M S
03
PORTFOLIO MANAGEMENT IS, COMMONLY KNOWN AS INVESTMENT
MANAGEMENT, ALL ABOUT THE TECHNIQUE OF MAKING THE RIGHT
DECISIONS ABOUT INVESTING IN VARIOUS FINANCIAL PRODUCTS &
OPPORTUNITIES. IT COMPRISES THE IDENTIFICATION OF INVESTING
NEEDS OF THE INVESTORS, MATCHING THE OBJECTIVES TO
EXISTING INVESTMENT OPPORTUNITY, ASSET ALLOCATION FOR THE
CLIENTS, WITH THE AIM TO MAXIMIZE RETURN AT A GIVEN LEVEL OF
RISK APPETITE.
Portfolio Management Company in India
04
AIM
Financial planning is all about planning, managing and budgeting for your estimated financial needs. Portfolio management is provided by financial professionals that create and recommend portfolios of stocks, bonds, mutual funds, exchange-traded funds (ETFs) or alternative investments to meet the investment objectives of a specific investor. Portfolio managers are focused on meeting the needs of investors through the rate of return achieved within a portfolio and they are often responsible for re-balancing the account to remain in line with the investor’s allocation preferences and risk tolerance. They perform day to day trading decisions on a portfolio of assets.
While comparing both the concepts, it is clearly visible that financial planning is a
wider concept than portfolio management
as it is involves a much more comprehensive and detailed process than portfolio management.Financial planning
covers many areas such as building an emergency fund, saving for a new home or reducing debt, accumulating retirement
assets, saving for a child’s college fund,
estate planning or creating tax efficiency.
05
SCOPE
06
OBJECTIVE
Wealth managers give advice and help to
enhance the overall financial situation of
their clients while investment manager is
concerned only to that particular portfolio
he is assigned to manage.
On one hand, Financial planning involves a
deep assessment of an individual’s overall
financial standing with the intention of
developing long term financial goals which
requires a recommendation on certain
products based on the individual’s goals.
On the other hand Portfolio management is
the assessment of various components of
portfolio so as to make various investment
decisions such as investment or divestment.
07
ASSESSMENT
W W W . W O R L D O F P M S . C O M
PORTFOLIO MANAGER VS. FINANCIAL ADVISOR
08
A professional who assists in financial planning is referred to as ʏFinancial Advisorʐ or ʏWealth Managerʐ. The one who provides the services of portfolio management is known as ʏPortfolio Managerʐ.ʏPortfolio Managerʐ and ʏFinancial Advisorʐ are often deemed as one but in fact both of them are distinct professionals
and do not perform the same function. Portfolio managers are
responsible for creating and maintain an investment account, while
financial advisors sell a specific product or service.
09
SERVICES INCORPORATED
A F I N A N C I A L P L A N N E R10 P R O V I D E S A V A S T A R R A Y O F F I N A N C I A L S E R V I C E S , I N V E S T M E N T A D V I C E , T A X A N D A C C O U N T S S E R V I C E S , R E T I R E M E N T A N D O T H E R P L A N S T O T H E I R C L I E N T S . P O R T F O L I O M A N A G E R S A R E C O M M I T T E D T O G I V E C L I E N T C E N T R E D A D V I C E T H A T S U I T S T H E I R C L I E N T ’ S P O R T F O L I O . W E A L T H M A N A G E M E N T H E L P S T O E N H A N C E F I N A N C I A L S I T U A T I O N O F A N I N D I V I D U A L O R A C O M P A N Y .