Watchdogs of investment

Financial doctors are in great demand, thanks to the growing number of millionaires in the country, says Ashwin Parbhakar.

In the existing scenario of globalisation and recession, most companies are looking for financial experts who can cut down cost and maximise profit. With the growing Indian economic system, finance professionals are in great demand in the corporate sector and small firms. Though it is a glamourless profession, a career in financial management can be quite rewarding.

They are the investment doctors who are responsible to take care of an individual or  an organisation’s financial health, ensuring orderly and systematic achievement of financial goals. Preparing financial reports, guiding investment activities and overall money management are the major duties of a financial manager. A skilled finance manager is a valuable asset to the organisation and what makes a good finance manager is not the skill to earn money but the ability to deal with money.

Financial planners, also known as financial consultants or personal financial advisors, use their knowledge of investments, tax laws, insurance and real estate to recommend financial options to individuals based on their short-term and long- term goals. The key objectives of financial management would be to create wealth for a business, generate cash and provide adequate return on investment, bearing in mind the risks and the resources invested.

The primary concern of financial management is the assessment rather than the techniques of financial quantification.

Various  levels

Broadly speaking, the process of financial management takes place in three levels. At the individual level, financial management involves tailoring expenses according to the financial resources of an individual. Individuals with surplus cash or access to funding invest their money to make up for the impact of taxation and inflation. Or else, they spend it on discretionary items. An FM must be able to take financial decisions that are intended to benefit the client in the long run and help them achieve their financial goals.

From an organisational point of view, the process of financial management is associated with planning and control. Financial planning seeks to quantify the various resources available and plan the size and timing of expenditures. Financial control refers to monitoring of cash flow. Inflow is the amount of money coming into a particular company, while outflow is a record of the expenditure being made by the company. Managing this movement of funds in relation to the budget is essential for a business.

At the corporate level, the main aim of the process of managing finances is to achieve the various goals a company has set for itself. Businesses also seek to generate substantial amounts of profits, following a particular set of financial processes.

FMs aim to boost the levels of resources at their disposal. Besides, they control the functioning of money inflow by external investors. Providing investors with sufficient amount of returns on their investments is one of the goals that every company tries to achieve. Efficient financial management ensures that this becomes possible. Financial management requires managers to be able to:

*Interpret financial reports including income statements, profits, loss, cash flow statements and balance sheet statements

*Improve the allocation of working capital within business operations

*Review and fine tune financial budgeting, revenue and cost forecasting

*Look at funding options for business expansion, including both long and short-term financing

*Review the financial health of the company or business unit using ratio analyses, such as gearing ratio, profit per employee and weighted cost of capital

*Understand the various techniques using in project and asset valuations

*Apply critical decision-making techniques to assess whether to proceed with an investment.

*Understand valuations frameworks for businesses, portfolios and intangible assets.
Eligibility

Most B-schools in India teach Finance as a specialisation under their MBA curriculum.

Basic qualification to this two-year, full-time programme is a graduation in any discipline and admission is based on a written test, group discussion and interview.

Some institutes offer executive MBA programme in Finance for those who have a few years of experience in the field.

Employment opportunities

Money decisions have become more complicated and India now has a continuously growing number of people with savings to invest. The corrosive effect of inflation on savings lying idle, a growing number of investment avenues and the varying risks of each, combined with rising aspirations will continue to fuel the need for such financial “doctors”.

Increasingly, a large number of individual investors — small as well as high net-worth — are seeking the services of these “investment doctors” to write their personal balance sheets. The demand for financial planners also springs from a variety of social factors such as increasing life expectancy, non-permanent jobs and a  growing ambition to study and travel abroad.

Where to study

*IIM- Ahmedabad

*Shailesh J Mehta School of Management, IIT Mumbai

*FMS — Faculty of Management Studies, University of Delhi

*IIM, Indore

*Jamnalal Bajaj Institute of Management Studies, Mumbai

*Narsee Monjee Institute of Management Studies, Mumbai

*Symbiosis Institute of Business Management, Pune

*Management Development Institute, Gurgaon

*S P Jain Institute of Management Studies, Mumbai

( The writer is the CEO of NGF College of Engineering and Technology, Palwal.)