One person came to me saying ‘This is a financial plan that my planner has done, is it good?’.

The plan was elaborate – cash flows for 10 years into the future, what product for each goal, rate of return assumption, – all this was there.

It ran into 59 pages and could be called comprehensive too, but there was just too much information based on the products that he already had. The planner had sold him a lot of life insurance plans (some ULIP and some endowment). He had then smartly used a term plan as a top up. 

Sir you need Rs. 2 crore life insurance….the Rs. 800,000 premium gets you about Rs. 50L of cover, so let us top it up with a ‘term’ plan. 

He had made him do some SIPs, but with no logic of why which scheme. A couple of good schemes, and a few bad schemes from houses where performance has never been seen. 

The Housing EMI assumed that husband and wife would continue to earn for another 30 years – the wife was OBVIOUSLY planning a maternity break of 6-8 years – to have 2 kids. This was not considered.

Both H and W were dependent on the company’s medical insurance. Both had parents who were currently NOT staying with them, but could be moving in. This was not considered while considering life style changes. Kids were studying, fees was provided for – at a reasonably accurate amount of SIP, but at an aggressive assumption that a ULIP would give 17% return. Assuming this rate for 6 years, is aggressive – I am not commenting on whether it will be achieved. 

He was saving/ investing too little for this retirement, and ONLY endowment policies for retirement, did not make too much sense. He also had a pension plan from a Life Insurance company – and this would obviously be a compulsory annuity, at very poor rates.

The worst thing he/she is expecting me to answer in one word: 

Is this a good plan or not. 

My answer: LEARN financial planning. The financial services industry has to many banana peels around. I know of brilliant IIT, IIM, super intelligent people falling saying ‘it is only 6 lakhs’ ..i have seen older people cheated,…the list is endless..nothing like protecting your own backside. I keep saying, the only protection that a girl has from any molestation attempt is to learn karate…In Sholay Gabbar Singh says ‘aapko Gabbar se…ek hi aadmi bacha sakta hai…aur woh hai Khud gabbar…’ I hope the clients do not believe it when the financial industry says this to them…:-)