While talking about fee only financial planners, one thing should be taken into consideration is that "Fee-Only" planners are compensated solely by fees paid by their clients, and do not accept commissions or compensation from any other source. The National Association of Personal Financial Advisors (NAPFA) is the largest organization of "fee-only" planners.
The main function of fee only financial planners is to develop a sound financial plan. A sound financial plan should be simple as well as practical. When there is complexity in the financial plan the operating executives will find it difficult to follow. It should be designed with a long-term view. While designing the investment, financial and dividend policies, the long-term requirements of the concern are also to be considered. Sound financial planning requires vision and forecast. Proper forecasting of the future is necessary to design the financial plan. It should have enough flexibility to incorporate changes in the plans.
Financial planning should ensure liquidity. The concern should be able to meet the maturing obligations in time. However, maintaining of liquidity should not be at the cost of profitability. It should ensure economy also. That is, the cost associated with various financial decisions should be the minimum. It should aim at the best possible use of the available resources, especially finance. A poor balance between fixed and working capital should be maintained for using the capital effectively.
The nature of business plays a decisive role in designing financial plans. A capital-intensive industry like iron and steel requires more capital. Besides, the stability and regularity of income, future prospects of growth, and the fluctuation in the demand for the product being manufactured by the firm play dominant roles in determining the capital needs as well as capital structure. The risk involved in the business has significant bearing on the determination of the capital structure.
