I have been thinking about this post for long, but last week I saw the portfolio of a 75+ year old man and almost puked.

A financial planner had (OMG you need to believe it please) had kept Rs. 100L in fixed deposits (full liquid net-worth) in post office schemes, bank fixed deposits, and company fixed deposits.

To cut a long story short, Corpus Rs. 1 crore, Interest income Rs. 10Lakhs, tax about Rs. 2.6L, the couple’s expenses Rs. 3-4L and the remaining money again ploughed back to bank fixed deposits.

If somebody had done this to your parents how would have you reacted?

I made some simple suggestions – shifted some money to a balanced fund, some to an MIP, some to an Income fund but kept the bank fixed deposits untouched. This would reduce his taxable income to about Rs. 3L, his wife’s income would be about Rs. 1.5 L, the couple would pay almost NIL tax. All the funds will go to growth scheme – and he will withdraw only in case of an emergency. A very small equity exposure will help him – in case there is some inflation protection required. May even do a SIP in an ELSS for both of them and keep more money in the bank.

Shifting of capital, deferring of tax, shifting current income to capital gains – these are things which should come naturally to a CA. If you financial planner cannot (or will not) suggest such things, he/she is a joker. Personal finance includes sensible tax planning.

Apart from this the planner should know clubbing, shifting a portfolio to a zero income person by methods like inheritance, etc. is something that a PF Planner SHOULD KNOW.

If he / she does not, dump him.