Journal of Management Research and Analysis

Print ISSN: 2394-2762

Online ISSN: 2394-2770

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Journal of Management Research and Analysis (JMRA) open access, peer-reviewed quarterly journal publishing since 2014 and is published under auspices of the Innovative Education and Scientific Research Foundation (IESRF), aim to uplift researchers, scholars, academicians, and professionals in all academic and scientific disciplines. IESRF is dedicated to the transfer of technology and research by publishing scientific journals, research content, providing professional’s membership, and conducting conferences, seminars, and award programs. With more...

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Get Permission Thakker: 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 25th 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

  1. To know the various objectives of financial planning

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

  3. People’s perspective on financial planning

  4. To determine the need of financial planning.

Scope of Research

Thus, this research is useful to the following parties:

  1. Financial institutions

  2. Financial service providers

  3. Corporate houses

  4. Investment advisors

  5. Banks and corporates

  6. Students

  7. Academicians

  8. 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.

Figure 1

Q2. Gender:

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/732c2bc0-4257-468e-babe-8540f9dab7b0-uimage.png

Figure 2

Q3. Age:

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/4f94f0ea-e6b8-448e-8f88-8b23989f8735-uimage.png

Figure 3

Q4. What is your approximate annual income?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/380560a8-ae25-478c-9519-415bfcd0f52b-uimage.png

Figure 4

Q5. Please select your occupation.

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/544e50f0-ab82-4959-8bef-d36b6567cfec-uimage.png

Figure 5

Q6. How many family members are dependent on you?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/14fd4199-9c3e-45a0-9cab-09ae0c28cb1a-uimage.png

Figure 6

Q7. Please select the dependents.

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/cea1cb8c-ef75-4693-81e8-88f465642e50-uimage.png

Figure 7

Q8. How many members of your family contribute to the family income?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/5caf3620-fe5a-446c-beba-ac5870527961-uimage.png

Figure 8

Q9. What is your main goal of financial planning?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/763b7285-8a14-4862-8fc0-85f4bdd46c8b-uimage.png

Figure 9

Q10. Do you know the difference between savings and Investment?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/c859dba7-1ef3-4572-89a5-9836ae31ac44-uimage.png

Figure 10

Q11. How much percentage of your salary/savings do you invest?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/d7dd956e-a41a-4966-b675-63335e4aecee-uimage.png

Figure 11

Q12. Which of the following investment avenues do you choose for your investment?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/ad2cc8dd-5a10-4ec3-967e-32fcb5baa09c-uimage.png

Figure 12

Q13. What is the current rate of return you earn on your investment?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/d818a223-6bef-4fca-bd54-a6b6cfb66199-uimage.png

Figure 13

Q14. Select your preferred time duration of investment.

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/c647c3c8-f99c-4778-ac54-6b7452e26df6-uimage.png

Figure 14

Q15. What kind of investment behavior do you possess?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/f098cc33-3045-4805-b69f-8090562b4625-uimage.png

Figure 15

Q16. Which of the following factors influence your investment decisions?

https://typeset-prod-media-server.s3.amazonaws.com/article_uploads/b308956a-1ae0-4c63-8ed9-decd2952619b/image/30f2d0b7-ae09-462e-8a33-837e4b19f433-uimage.png

Table 1

Test: Anova test

Questions

Yes

No

Are you aware about any financial planners?

38

17

Do you take help of any financial planners?

37

18

Hypothesis:

H0= people aware about financial planners do take help from them

Ha= people aware about financial planners do not take help from them

Anova: Single Factor

Summary

Groups

Count

Sum

Average

Variance

Column 1

2

75

37.5

0.5

Column 2

2

35

17.5

0.5

Anova

Source of Variation

SS

df

MS

F

P-value

F crit

Between Groups

400

1

400

800

0.001248

18.51282

Within Groups

1

2

0.5

Total

401

3

[i] Result: F value > F critical value, null hypothesis is to be rejected.

[ii] Interpretation: People who are aware of financial planners, do not take help from them.

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

Table 0

Less than 5%

5% - 7%

7% - 10%

More than 10%

Total

Q1

11

9

9

26

55

Q2

15

19

11

10

55

Total

26

28

20

36

110

Table 0

fo

fe

(fo-fe)

(fo-fe)2

(fo-fe)2/fe

11

13

-2

4

0.307

9

14

-5

25

1.786

9

10

-1

1

0.1

26

18

8

64

3.586

15

13

2

4

0.307

19

14

5

25

1.780.16

11

10

1

1

0.1

10

18

-8

64

3.556

Total

0

188

11.498

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

  1. Only 55 people have responded to the questionnaire.

  2. Limited area of reach.

  3. Use of manual method to calculate the test results

  4. 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.

References

1 

DS Murphy S Yetmar Personal financial planning attitudes: a preliminary study of graduate studentsManag Res Rev20103388117scott

2 

Z Peng Stochastic modeling of post-retirement financial planningProQuest2003124

3 

L Klaper G.A. Panos Financial Literacy and Retirement Planning:The Russian Case2011104599618

4 

PK Das A Review of Tax Planning for Educational Expenses on ChildrenJ Acco Fin200620https://www.bankbazaar.com/tax/income-tax-benefits-and-deductions-for-expenditure-on-children.html

5 

M Mittal R.K. Vyas Unpublished Theses, Bharathiyar University A Study on investment pattern and tax planning in the Nilgiris District2006

6 

M Kathuria K Singhania Investor Knowledge and Investment Practices of Private Sector Bank Employees, LalitIndian J Commerce2006https://www.iupindia.in/1203/Behavioral%20Finance/Investment_Decision_Making.html

7 

R Bhardwaj R Raheja Analysis of Income and Savings Pattern of Government and Private Senior Secondary School TeachersAsia Pac J Res Business Manag200629445

8 

PB Sood Y Medury Investment Preferences of Salaried Individuals towards Financial Products2006https://www.researchgate.net/publication/264356205



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Article type

Original Article


Article page

45-49


Authors Details

Khushbu Thakker


Article History

Received : 10-02-2023

Accepted : 14-03-2023


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