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