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Can a mutual fund substitute a Financial Plan?
04 Jul 2012, 12:36 PM
After the abolishment of entry load in August 2009 by former SEBI Chairman Mr C.B. Bhave, the mutual fund industry suffered a jolt. The distributors were unenthusiastic to push mutual funds to their clients, as no more luring commissions in-built in entry load were to flow for their business.

However later as a strategic move, the mutual fund industry started chanting the mantra of "financial planning". The mutual fund industry too, in order to safeguard their own interest of garnering more AUM (Asset Under Management), trained distributors to push mutual fund products by training them to emphasize on the need of financial planning to investors. And interestingly, distributors' too revealed interest as some mutual fund houses promised commissions from their own pocket.

But in all these strategic moves played by the industry and your mutual fund distributor / agent/ relationship manager, the question is - were you offered an appropriate mutual fund scheme(s) meeting your financial goals, or were you a victim of mis-selling caused by the fragmented knowledge of financial planning on the part of your mutual fund distributor / agent / relationship manager?

The term financial planning unfortunately, has been very loosely used in the wealth management industry. Very few recognise that it is a much personalised service, where enormous personal financial data needs to be obtained to draw an unbiased plan which can aid you to achieve your financial goals.

Today, assessing the fact that there's a huge potential for financial planning, many software packages are available. Setting a trend, many mutual funds houses too have launched several mutual fund schemes, which they claim to cater to your financial goals. And many of you investors have shown a tendency to flock onto these fancy software packages or so-called financial planning funds. But in this bargain you have failed to recognise that the whole financial planning exercise is more personalised in nature,
 
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