Financial planning is simple!

One of the most important things I HAVE to do while training Relationship Managers in banks is to keep reminding them that they are not:

a. Fund Managers nor are they b. Financial planners.

The roles of each person – inspite of some common areas – is vastly different. Similarly another worry is – the financial services industry would like to tell you that financial planning is very complicated. However there are some websites telling you that things like Retirement planning is simple.

The truth lies somewhere in between. Manish Chauhan who runs has done one article saying ‘6 steps to retirement planning’. Sorry Manish Retirement Planning is not so simple. Frankly I do not think, ANY Financial Planner in India has applied his mind to volatility effects on the retiree’s portfolio. Monte Carlo analysis is necessary – especially for smaller portfolios. The fact that there has even been a Nobel prize for managing volatility shows how complicated life is.

Completely on your side if you tell me that such service is not available in India. However if a person with a small portfolio were to try to manage it himself, not understand power of attorney, not know how to lock in small annuities regularly, create a bank FD ladder – or a single premium pension plan ladder, – apart from the usual investment basics, HE CANNOT DO FINANCIAL PLANNING.

After completing my book I have realised that a step-by-step manual, a series of programs, CDs with simulation exercises…are all necessary if somebody was serious enough about retirement.

For Manish of course retirement is about 50 years away….:) so it may not matter NOW.

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3 Responses to “Financial planning is simple!”

  1. “Completely on your side if you tell me that such service is not available in India.” – couldn’t agree more… To perform Monte Carlo simulation, you need data. barely 10-20 yrs of Indian market data is way too low to derive any conclusions. Even Indians forget the hyper-inflationary periods 20-30 yrs back & “assume” inflation of 5% for the next 50-60 yrs for retirement planning…

  2. Subra

    I agree with you, however what I tried to do on the post was to give a better way of planning things compared to what people do today . If that post is not there , people will not do anything , atleast with that post , they get some basic idea. I have seen your book and the topics which you cover make sense . It cant be just 6 steps, what I tried was to fit in my best in that single page 🙂 .

    I should have included the note at the end , that This just gives you very basic idea of numbers , in real retirement planning needs more inputs and needs deeper analysis .

    Do u think giving those kind of calculations to general public can have negative impact ? I mean to ask, are you saying “Please dont do it , if you dont know it” ? Your inputs will help in improvement further . All i wanted was to give some direction to readers to atleast start thinking about Retirement , also the article I wrote was 1 yr old , when I was more uneducated than present 🙂 . Looking for your guidance


  3. Over confidence of people with shallow knowledge is a big source of risk for many potential investors. Not many readers understand the risk of poor advice – whether from an adviser, a parent, spouse, …poorly chosen adviser. Or even worse from bad magazines, pathetic television shows, or blogs.

    There seems to be no shortage of any of them 🙂

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