“Subra, I met this Financial Planner and he has offered to do my financial planning for a fee of Rs. 24,000 – I can afford it, is it worth it?”

was a call that I handled this week.

I said:

Gee, frankly I do not know. It takes a great mind to say “I will charge you Rs. 24k, but honestly there is not much to do. And if you do your Rs. 250,000 per month SIP with me under my code, I will rebate the commission for the first year from the fee that you pay me. Take term insurance from the cheapest source on the net. Take your medical insurance from a government run organisation (internationally Ergo and Alliance are great claims payers – but I have no clue how they will behave in India where medical records have no legal sanctity).

So I asked him more details about the financial planner. He had promised to

monitor the portfolio on a regular basis (I am still wondering what this means since I heard it 30 years ago),

will anticipate the changes and do a portfolio shuffling on a YEARLY BASIS (to me this was suicide),

choose a Pension Plan and a Child Plan (to me this was amusing)

choose a term plan and a medical insurance plan (he was choosing the MOST complicated company)

do a cash flow (what if analysis for 30 years including what would happen if he lost a hand, leg, heart, life, etc.)

do a cash flow projection for him during retirement (this guy is now 32 years old)

do an annual review for a fee of Rs. 5000

be available for 3 hours during the year for any discussion

The client had a choice of where he bought mutual funds from (he would be doing a 1 year SIP and at the end of the year decide whether to continue based on the performance), BUT the life insurance had to be bought through the financial planner.

Frankly from the clients point of view this was NOT  a good deal, nor was the client capable of doing it himself — he was damn too lazy.

I had no alternatives to suggest….last I know his wife was tugging his shirt collar saying “Yeh sirf gyaan deta hai….WE NEED TO DO SOME THING..so what if it is wrong, we are smart enough to handle adversities, are we not”.

God bless.

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  1. It takes a complicated mind to like simple solutions – AND PAY FOR IT. Frankly if you invest in 3-4 funds, take a term insurance, ..and get some other basics right, it is sufficient. However today’s educated people want detailed cash flow projections, ‘what will happen if my husband’s left hand stops working – how much more money will we need?’ kinda question answers..which I encounter. I can only laugh. Itna detailing math karo yaar…leave something to trust and God too. As a generation we think we control a lot of things. Sad thing is we do not. Surely up there HE must be laughing…

  2. Many financial planners will become jobless because of your article. 🙂

    So it seems like Subra sir believes only in investing and not in speculating and timing.

  3. Suggestion. Can we create a site like this one?(general/non-life insurance)


    As you can see two of the top 5 ‘good claims paying’ insurers are Chubb and Allianz. Of this only the latter is in India whilst the former retails some non retail products through HDFC. How ever as you rightly said, their US performance is no guarantee of their Indian service (same as any other MNC).
    p.s : it should be Allianz and not Alliance (the latter being an insurance broker in India and/or till recently a Cyprus based insurer- both unrelated).Sorry for nit picking.

  4. it is possible to hold a LIFE INSURANCE TERM PLAN abroad….so those who do travel and are willing to take the risk ..should take a US $ 1 Million in US…or whatever…think about it

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