“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. (of course if you read about Ranbaxy and do not trust Religare, take it from the next one….ultimately if you trust Hdfc take it from Hdfc, but if you trust LIC and it is the most expensive, still it is your call – as a financial planner I take no guarantee as to who will pay a genuine claim). Even IRDA does not know what will happen if your claim does not get paid, so please spare me the details.

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.

By the way, how much a professional charges is a function of too many things:

– the planner’s qualification (the bodies to which we belong do a lot of subtle marketing you see)

– the planner’s office location (obviously you can charge more if you are in Santacruz West instead of Kanjurmarg)

– how posh is the planner’s office

– how well is the planner dressed (formals with tie is much better than Tee and Jeans)

– how big and complicated the plan is (the less that you understand, the better)

– how well he treats your wife n kids (daddy daddy let us go to John uncle’s office, he gives nice chocolates and toys to play)

….so depending on your own insecurities, knowledge levels, …..you decide to pay 5k or 55k….pick your number….


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