Why do I need a SEBI Registered Investment Advisor?

Will my data be safe & secure with the advisor?

A Registered Investment Advisor comes directly under the regulations of SEBI and is expected to act as a client fiduciary and hence is bound to keep all information confidential. However, you may insist on signing a Non Disclosure Agreement (NDA) to ensure some legal sanctity as well.

How should I implement the investment recommendations?

It is always advisable to keep the implementation of investments separate from the person who provides the investment advice. This ensures that the advice provided is truly independent of any monetary incentives from the product manufacturers. Even mutual funds provide ‘Direct Plans’ which does not engage any agent and can be directly implemented upon the advice received from a SEBI RIA. Even for investments directly in the share markets, there are reputed online discount brokers who charge a flat fee per transaction instead of a percentage of the transaction amount. Such options will save you huge amounts of money in operational expenses in the long run.

Some advisors may have their family members involved in distribution of investment products, and if the advisor insists on implementing the recommendations with them, you may excuse yourself from doing so and choose the direct mode.

What is the guarantee that the money invested will be safe?

No advisor can (nor is supposed to) provide any guarantees on the recommended investments as they are subject to market vagaries. It would pay you well to understand that even bank deposits are safe only to the extent of Rs. 1 Lakh through the insurance scheme of the Government of India! Therefore, you need to understand that the investments made require your patience to deliver performance. The key to successful investment is to know the risks involved and create a diversified investment portfolio spread across various asset classes as per your financial strategy determined through the Life Cash Flow Analysis and Feasibility Study of various goals. You may insist that your investment advisor takes you through this process before recommending the investments!

Why do I think I don't need financial planning ?

I am too young / old
While it is true that the younger you start the more beneficial the process will be, financial planning is worthwhile at any age. Although younger people may have more decisions to make regarding their financial lives, changing laws and circumstances can lead middle-aged people and seniors to have to adjust their financial plans as well. Changes in tax law, for example, may require many people to revisit certain investments or estate plans, and adequate disability planning becomes more important as people age.

I save enough
How much is enough can only be determined after you do your need analysis in a scientific manner?

I have enough assets to take care of my needs
What is termed as an asset is itself a debatable issue, however generally an 'Asset' is "what produces an income for the holder." And if left unmonitored assets could lose its value due to market forces and may be insufficient to fulfill the needs when they arise.

I can always borrow when I need
Borrowing of money depends on various parameters such as interest rates, repayment capacity and eligibility which may change from time to time and is independent of the timing of requirement. Therefore complete dependency on borrowing is not recommended.

I don't need to think about retirement, my kids will take care of me
Every individual has his/her own priorities which are more or less decided by circumstances. In such a scenario, it is always advisable to build the nest before it rains instead of depending on someone else, even if that someone is your own child.

My business will take care of me
Business is one of the most volatile sources of income. There are many governing factors such as recession and liquidity in the market which could adversely affect the profitability of a business. Therefore it is recommended to avoid excessive dependency on one's own business and create a parallel passive source of income through an appropriate investment portfolio sufficient enough to provide for the financial goals.

I do enough investments to save tax
Investing to save tax is the most popular practice prevailing in India. No doubt that is one of the strategies of tax planning. However, many a times such investments are done without analyzing the instrument or the financial objective.

My business will always be profitable, so I reinvest all my income into my own business
As the old adage says, don't put all your eggs in one basket even if the basket is your own!! Therefore reinvestment into one's own business should be after budgeting for creation of an appropriate investment portfolio sufficient enough to provide for the financial goals on a year on year basis and also after taking into consideration one's life stage.

I'll always have my job
In the current economic situation, job security is a very distant dream. Almost surely you would get another job, however, there is no guarantee of similar income being replaced in the new assignment and what about the period in between these jobs when there is no income and only expenses? Would you be able to sustain your current lifestyle?

I am insured
Insurance is just one aspect of financial planning. In addition to checking whether you are adequately insured in a scientific manner, we should also take care of the various financial goals in a systematic way by making sure that adequate cash flows are available at the right time.

How can I ensure that my Financial Planner is unbiased?

An ideal financial planner is expected to be totally unbiased towards the client. However you may judge his genuineness by the certification he possesses and by his method of remuneration i.e. fees or commission. A financial planner who provides fee based service is almost always unbiased, because he is not dependent on making money through commission from the investments made, and therefore solutions provided would most probably be in your best interest.

Can I do my own Financial Planning?

Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, you may decide to seek help from a professional financial planner if:

  • You lack expertise in certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances.
  • You need to infuse more accuracy in what you have done for yourself
  • You don't have enough time to spare for doing your own financial planning

How to make Financial Planning work for you?

You are the focus of the financial planning process. As such, the results you get from working with a financial planner are as much your responsibility as they are those of the planner. To achieve the best results from your financial planning engagement, you will need to be prepared to avoid some of the common mistakes by considering the following advice:

  • Set measurable financial goals.
    Set specific targets of what you want to achieve and when you want to achieve. For example, instead of saying you want to be "comfortable" when you retire or that you want your children to attend "good" schools, you need to quantify what "comfortable" and "good" mean so that you'll know when you've reached your goals.

  • Understand the effect of each financial decision.
    Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child's education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated.

  • Re-evaluate your financial situation periodically.
    Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals.

  • Start planning as soon as you can
    Don't delay your financial planning. People, who save or invest small amounts of money early on, and more frequently, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.

  • Be realistic in your expectations
    Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results. Therefore it would be better to develop an attitude of 'controlled greed' and 'controlled fear' instead of an unhealthy extreme in both cases.

  • Realize that you are in charge
    If you're working with a financial planner, be sure you understand the financial planning process and what the planner should be doing. Provide the planner with all of the relevant information on your financial situation. Ask questions about the recommendations offered to you and play an active role in decision-making.



Data gathering means collection of information relevant to the financial planning process. In this step, a financial planner collects information about the client’s financial goals, income, expenditure, investments etc. This is the first step in actual financial plan preparation & it plays a foundational role in construction of a financial plan. Success of a financial plan wholly depends on the given data and to make sure that the data given is accurate is solely the client’s responsibility.


This is the second step in financial plan construction process and in this process a financial planner converts the needs and aspirations of the client into tangible numbers, especially the quantity of money required at various stages for each goal such as retirement, children's education, marriage, purchase of new house/car, foreign tours etc.


Once the Financial Objectives are set up, all the cash inflows and outflows (both current and projected future cash flows) are mapped on to a worksheet and detailed analysis is done in order to derive the expected return on investment of surpluses generated in each year. There could be two outputs for this exercise.

  • 1. The expected return based on the income, expenditure, financial objectives, time availability for fulfillment of goals and life stage. This method is used for individuals having a limited source of income. Eg: salaried individuals, professionals.
  • 2. The income requirement for keeping the expected return within the acceptable range based on life stage. This is suggested for individuals with variable income possibility and possessing the capacity to leverage time and money. Eg. Businessmen


Once the expected return on investments/ expected income is derived, and if it falls beyond the acceptable criteria, it means that some of the goals are beyond reach as on date and should be either postponed or ‘cancelled for the time being’. If any goal is cancelled, it could find its way back into the system at the time of review or whenever cash flows change substantially in the positive direction. Multiple scenarios involving re-alignment of various goals could be looked at before making the final decision.


The financial plan is heavily dependent on two factors.

  • 1. The cash flow generated by the bread winner/s of the family
  • 2. The returns/passive income generated by financial and real assets

Therefore careful consideration has to be taken in order to protect these factors in the event of occurrence of an unfortunate incident such as death, disability, theft, fire, natural calamities etc. This is ensured through adequate Insurance planning for all assets (Life, Health, Property etc.) For health and property, it is a very simple exercise to compute the amount of insurance since their monetary values are readily available.

eg: A house can be insured to the extent of ‘cost of reconstruction’ in the event it gets destroyed completely Health can be insured to the extent of the cost of treatment for various ailments/surgeries with sufficient allowances based on the health history of the individual/family.

However it is impossible to determine an appropriate value in the case of Life Insurance as there cannot be a monetary value attributed to human life! Therefore we need to resort to some complex methods using some alternative logic as given below:

Need Based Approach

This approach looks into the financial goals set by the individual in the order of priority and filters out those objectives which have to be accomplished irrespective of whether the person concerned is alive or not. These filtered goal values are used for estimation of insurance requirement.Further optimization can be done in this approach by using our unique method of ‘Life Insurance Laddering’ Since this method gives a very realistic and efficient estimate of life insurance requirement, it is used in our Comprehensive Financial Planning engagement.

Human Life Value method

This uses the income generated by the individual as a benchmark for insurance calculation. However this method may not give us a realistic estimate in certain extreme cases and therefore is considered to be inefficient. Therefore we use this method only in the 2 hour Financial Health Check engagement, where we have to estimate the insurance requirement in a quick fire manner and that too with limited data.


The insurance premium is considered as a cost/expense by us and NOT as an investment since we recommend pure risk coverage products only as they are the most efficient and excellent value for money. Now, since we use the ‘Need based approach’ for life insurance computation, the Cash flow analysis has to precede the insurance calculation and therefore the costs relating to fresh insurance implementation could not be factored into the cash flow analysis. Further, there is a possibility of the actual premium being different from the indicative value owing primarily to the medical condition of the individual. This presents a catch 22 situation. The only way out is to repeat the cash flow analysis step after incorporating the fresh insurance costs! The result of this step is the ‘revised expected return’, which will be used to prepare the investment portfolio.


Once the required rate of return is known, a financial planner would be in a better position to create an appropriate investment portfolio. This is the reason why contrary to popular belief, financial planning is NOT about ‘dealing with investments’. It is more of a philosophy and process, which, if practiced would give a more logical, realistic and consistent result. Very few people understand this, though! The major challenge in this step is to ensure an appropriate spread across various asset classes without hampering the expected return! Also care needs to be taken to choose the most optimum combination which gives the least measurement of risk in without hampering the balance in the asset allocation! This interplay between return, risk and asset allocation is the sensitive balance that has to be maintained on a continuous basis which cannot be achieved without in depth study

Once the portfolio is made, it is highly recommended that it be re-balanced on a yearly basis, taking cognizance of the realized return during the year and the changes in the cash flow pattern of the individual.


The process so far has been only a blue print of your financial plan and will bear fruits only if it gets translated into reality in terms of actually investing the recommended amount of money in the respective asset classes. Further, care has to be taken with respect to the proportions of investments suggested across the various assets within an asset class. Though we recommend investments in fixed income instruments such as NSE, PPF or FD to be made in the lump sum mode, investments into variable income instruments such as direct equity, mutual funds etc has to be done in a phase wise manner so that the market fluctuations could be taken advantage of. Our specialty in this step is that specific recommendations would be given from our end in terms of what portion of the variable income instruments should be invested from time to time and we call this ‘Market Sensitive Implementation Strategy’. This generally gets compared with a systematic investment plan. However the truth is that though it looks similar, the major difference between the two strategies is that SIP is a passive strategy and MSIS is an active strategy incorporating continuous market intelligence based on local and global economic factors. Simply put, since it is difficult to time the market at the lowest level with a large amount, we’ll try to time the market at every dip during the market cycle with small amounts.


A financial plan can be humorously described as a continuous battle between futuristic projection and accomplished reality!

Therefore it is highly recommended that the whole process may be repeated at regular intervals (generally in an annual mode) to take cognizance of the difference between the winner and the loser. If the accomplished reality is the victor, then the investment strategy for the next year would shift towards a more conservative side and in case it is the loser, a more aggressive stance would be taken.

The deviations between expected and realized values could occur primarily in the cash flows, goals and the investment returns. This would have a secondary impact on the expected return for the next year, insurance requirements and the composition of the investment portfolio. It may sometimes happen that the changes happen anywhere during the year before the regular review becomes due. In such a scenario, the client can initiate what we call as an ‘Accelerated Review’. There are no restrictions on the number of accelerated reviews during the year provided the reasons cited are genuine and could have a substantial impact on the financial plan.