Monday, April 17, 2017



Mr. Sudesh was working with an IT firm. He was doing well for himself and his family. He was part of the middle management team and was working on a decent salary with an annual bonus. He used to plan for everything, be it vacation or admission of his two daughters at school. In his group, he was known as a disciplined person who manages everything well on his own. But when it came to financial planning, his approach was as orthodox as it can be, as he also believed that financial planning and wealth management is for wealthy people and he doesn’t need such services. 

He used to save his money in different asset classes like many people do but without any classification of “purpose “and “need analysis “. After a few years, Mr. Sudesh found himself being forced to leave his job as his industry was going through a bad phase. Now he was struggling with finances. After working for 20 years, he was unable to fund his new business and neither he was able to fund his family expenses. For him, Equity was risky, term insurance was an unnecessary cost and investing in the mutual fund was all about picking top one-year performing funds.

Was his approach right?

Financial planning is a very important aspect of today’s life. Like a doctor cannot do his own operation, the same way we cannot do everything on our own. The most dangerous things in any financial planning are mainly 2 things time and the right product.

There are 5 important “Myth” about financial planning, they are:

1.   It is only for wealthy people: The the biggest myth about financial planning is that it is only for wealthy people because these services are available to them only who have a large chunk of money. It is totally wrong, if you have a financial goal then you are eligible for a financial adviser. A financial adviser is the right person to choose the right mix of products which caters to each aspect of financial goals be it investments or risk management. A financial planner always understands your needs and goals with a certain time limit then he chooses the right product mix for your needs.

2.      I know everything as I know how to earn then I know how to manage: You cannot be a jack of all trades. Yes, that’s right that you know how to earn but not necessarily how to manage by looking at the future prospects. The biggest problem in this is that we intend to go bias and give wrong priority to wrong investments or risk management.  But a financial advisor always looks things with the right future prospect and helps you in achieving financial goals with a high level of risk management.

3.      It is too early: At 25 age, we think it is too early to think about financial planning, at 30 age we start thinking about and actually start financial planning at age of 35 and sincere efforts we take after 40 only. This is the biggest blunder we do in our life. When liabilities are less we invest nil or less and when liabilities arises then we start thinking about it but actually by the time we have lost 10-15 most precious year where we can get a cheap term plan ( for lifelong ) or Longer period for a small amount of investment. We take the burden of lump-sum investment after age 40 for a better multiplier on investment. Which we should have avoided by doing small investment at the starting age of 25 when we entered in the job. The basic principle of investment is the principal of financial planning, which is “sooner the better “.

4.   I own my mistakes why should I trust anyone else: Like you can go wrong, your financial planner can also go wrong in some planning but the core essence of financial planning is an evaluation which allows the financial adviser to review asset class or risk management tools time to time. It helps in changing the product mix and to reshuffle the mechanism. Financial planner generally keeps a target of 110% so that if the error possibility of 10% arises still you achieve your desired goals.

5.    Anyone who knows tax or banking can be financial adviser: Trust me this is the biggest myth about financial planning that anyone who knows tax planning or his liquidity position; he can do his financial planning. Banking is all about money management through saving bank account, fixed deposit, loans not beyond that. Similarly, a tax consultant can always advise you based on taxation. But a Financial Adviser covers everything, starting from liquid money management like you should always keep up to 3 months of salary in the bank account, and 3 months’ salary for emergency funds in some fixed deposit or liquid funds which can be accessed immediately when needed. Then he will come to investment and risk management. Financial adviser always works with cash inflow analysis to cash outflow analysis. He always talks about short term goals to midterm goals and midterm goals to long term goals.

Much of disaster happens in financial planning when we take advice from relatives who invested in different asset class. He may yield good return but that doesn’t mean that his financial planning will help you. Financial planning is not only about generating good returns, it covers each aspect of financial health.

As I stated earlier, we need a special person for a specialist job. Like an ENT specialist cannot do the job of a heart surgeon. Same stands for self-financial planning. We are bound to get bias and product-oriented. We need a specialist who understands the needs of financial goals and understands how to achieve them.

“Financial planning is the core essence of today’s risky life it helps you in achieving important goals of life “

(Author is Mr. Rohit Khandelwal; He is a certified Mutual fund and IRDA adviser. He is associated with These are the author’s personal views.

Tuesday, April 11, 2017

Choose your financial adviser wisely


Mr. Deepak is a wealthy person based out of New Delhi. He has been investing in different asset classes for 10 years. In the last 10 years, he had 5 financial advisers including insurance agent, banker, wealth manager, individual financial advisers, and relatives. He has been investing in ULIPs, mutual funds, real estate, and fixed income plans apart from normal FDs and saving bank account.  But now when he needs cash outflow for his requirement, he feels that his money is stuck in every investment.

“Was Mr. Deepak’s approach towards Investment Planning right?”

I may be sounding very conservative in the investment approach but it’s my opinion that one should choose financial adviser first before anything. You have certain financial goals and liabilities to take care of in the future. If your financial adviser doesn’t ask or know about it, then it would be like driving on the highway without knowing your destination. There is a major gap between product adviser and a financial adviser.

Who is product adviser? Product adviser is a person who comes to you with a prefixed mindset with a single product offering to you. He may or may not be interested in your goal. He will be the right candidate to sell the product but does that product full fill your future financial goals, maybe or may not be.

Who is a financial adviser? Financial adviser or you can say financial planning manager is a person who asks three most important questions from you before any product offering, which are:

“Why”: He understands your profile and asks why you need financial planning. With patience, he understands the need for your financial goals. He adds a valuable point of view with the right prospects with you. He makes a profile for you while understanding your goal set.

“When”: His second question comes “when”, to understand your time limit for each financial goal. He designs and draws a plan according to this question. He determines all cash inflows and outflows with a particular time limit. He makes sure that your plan of investment should deliver your desired financial goals in the desired time frame.

"How Much risk”: I maybe at the age of 30 but I am conservative in my approach and I am looking for a limited risk, so my portfolio will be designed accordingly. Equity is a very good tool for investment but it may create volatility in my portfolio. Am I ready for this?  It should be understood by a financial adviser. At above-mentioned age, I am looking for a 12% return for next 20 years then my planning will be different but someone who is looking for 18% return will be having different planning as mine and others risk appetite is different.  A financial adviser should always advise on risk hedging tools like “Insurance” to you. Insurance is not an investment but it is a fantastic tool of hedging the risk if something happens to you in your long term goal planning. 

The differentiation between product adviser and a financial adviser can affect your return in the long term. Knowledge of financial advisers is always the key. He estimates each aspect of your financial goals, risk, and cash outflow requirement before making investments. A financial plan without a certain financial goal is like buying grocery which expires after a specific time and may not fulfill your desired needs in the future. Financial adviser is a relationship that goes for the long term with multi-product advisory. Financial adviser always reviews the portfolio in a specific time frame to evaluate the result after a specific time and helps in the achievement of the desired result.

Plan your financial goals wisely with the help of a financial planning manager who can understand your requirements and can suggest you on different avenues of financial products.

“A need for financial goal is certain but risk planning and assessment of financial goals is also important. Don’t go directionless, plan, implement and execute with a proper financial planning manager”.

(Author is Mr. Rohit Khandelwal; He is a certified Mutual fund and IRDA adviser. He is associated with