Here is a mail from a reader…I thought readers / fans of planners / etc. should respond. Would love a response from Babar Zaidi, Ritu Kant Ojha, Anirrudha, Kamya Jaiswal, Debashis Basu, Khyati Dharamsi, Deepa Venkatraghvan, …other CFPs, ….all others welcome. I personally do not understand how personal financial planners work (well to a great extent) so will reserve my comment for now.
I am a regular reader of your blog. Thanks for all the knowledge being shared. Could you please help me understand what exactly is financial planning/how it works? I am asking this question because to understand if the following is part of it and I do not know anyone other than you who could write about it. I Am writing this mail since I do not want to give some of my details to general public. If you could write an article in your blog, that would be helful. Here are my details
My Goal is to be wealthy and intermediate goal is to be financialy secure (In the sense, I am aiming for the starts so that even if I fall short, I’ll end upin moon)
I was reading about being financialy secure as I came to a conclusion that the financial security is everyone’s business and I read many article and came across a CFP and he advised that he couldhelp on my finacial planning through his firm.
1. I did a profiler stating my liabilities and my goals and how much I have saved for my goals and came with a plan on how much I would need going forward, paid the Financial Planning fees of 15000 Rs in 2006 (They advised that only if there is any major change to the plan, they would charge fee if the plan needs to be revised)
2. They told me the life cover I would need so that my family has sufficient funds if anything happens to me. took a term policy (They did not advise any insurer)
3. They advised me on the mutual funds I should take and what should be the SIP amounts, their name is there as advisor and my SIPs are still running from Jan 2007.
4. Initaillay it was agreed that 1% of actively managed money will be charged as fee for maintaining the sips and sending me statements monthly.(I was of the impression that actively managed money means the money that gets added from my pocket every year).
5. Later when entry load was removed from direct mutual fund investments, firm told that fees will not be collected from clients as the entry load was there for investments through advisors.
6. Then all the entry loads were removed and FP firm came back with 2 options (10% performance fee – this is like on a particular date if the portfolio value is higher than last year’s same date (anniversary), they will charge 10% if the portfolio value increased) – Point to be noted that additional investments of the last year is taken as is, which is not fair as per me. Second option is 1% of the market value of the portfolio at the anniversary date.
I am confused is this how the financial planning works? Financial planner will be fund advisor as well? why dont they say which insurnce company to use, coz the claim settlement ratio everything needs to be considered right?
Please advise. Please let me know if you need more information.
Ps: dear reader I am also confused. Happy republic day.
he did not want his name to be revealed, so not revealing it…
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