10 things we observed after working with 2,000+ financial planning clients

POSTED BY Jagoinvestor ON July 9, 2018 COMMENTS (30)

Few days back, I was sitting with a financial planning in our Pune Office and we did a very detailed discussion on his financial life. We looked at various parameters and did basic number crunching which gave a deeper understand to this client about financial financial status.

The first step was to record all his financial details at one place and that exercise alone took more than 40 min, because it’s a task in itself to just bring all the financial details at one place.

For the next 2 hours, the husband and wife were totally into discussing some of the aspects of their financial life which they had never thought of or never dealt in detail. It was a wonderful experience in itself.

2000+ Families have gone through the process

My team has done this same exercise with more than 2,000 families till date across the world (Indian residents and NRI’s). Most of these discussions have happened online and few of them have happened face to face. But overall, what matters is the interest and dedication of the client and not the medium of communication.

While we were doing this exercise with the client, I thought that there are many things which are so common among the clients we deal with. I can see a lot of things which gets repeated all the time and there is a pattern with majority of the cases.

So I thought why not share some of common observations and I made a list of 10 points which is true for almost 80-90% of the clients we have dealt till now.

These 10 points will give you a good idea on how a typical financial planning case looks like and you can also check if these points are true for you or not.

Let me put these points now one by one..

1. No idea of their exact expenses

One thing which is most common is that most of the people do not have much idea of their own expenses and how much they are spending in different categories. Now you will feel – “How is it possible, that a person does not know their own expenses?”

The point is that most of the people have a very vague idea of how much they are spending on various categories because most of the people do not note down and follow a stringent budget. People have a high level idea for everything, but once they put down all the numbers – They get surprised on their own expenses and feel like – “Ohh .. I spend so much !! , Never realized that”

2. The legacy of LIC policies

Almost everyone who comes to us for financial planning always have 2-3 LIC policies which was taken long back for tax saving purpose. If not for tax saving purpose, it was bought by their parents and they are now continuing it and paying the premium.

They have a high level idea of the Sum Assured and when it’s maturing and hardly few people recall the exact policy name.

3. People are Surprised

When we do the detailed analysis and show where they stand in their financial life (backed by data and proper reasoning), most of the people are surprised on how bad or how good they are doing.

Mostly we all are so consumed in our life that we never realize the status of our finances. We have very fuzzy understanding if things are going bad or good.

Some of the people realize that they are worrying too much, where as they are well placed and are on right track (very few people are like that) and majority of people realize after meeting us that they have underestimated how bad they are in their financial life and its HIGH time they need to quickly take action.

4. Confused on how much they would need to retire today

When we discuss about their retirement planning, almost everyone fails to reach a number which will be enough for them to retire today.

Just think about it.

If I ask you today that assume you retire today and you have to spend another 30-40 yrs of your life without any debt or EMI burden and no commitment like children related expenses. Assume you are 60 yr old today, and now need a big amount to live your life till you die, how much money would you need ?

Just think about this for yourself and you will realize that it’s a tough question to answer. Will it be Rs 2 crore? 5 crore? 10 crore?

5. No clear Financial Goals in life

Most of the investors we see are mostly living in present and dealing with financial goals as and when they arrive. They know they would need “lots of money” in future. But almost no one has properly planned for their financial goals.

One of the couple we met recently wanted to plan for their kids related goals. The wife was clear that they education was the biggest goal, but the husband was confused if they should also plan for the Marriage goal or not.

6. Decisions taken based on “Instant Gratification”

We see that almost everyone has taken lots of decision based on “instant gratification” or “the short term benefit” . Someone called from bank and said they will save tax on a product , and they buy it .

The gold prices were rising and it “felt” right decision at that moment, so they bought lots of gold and not from last 4 yrs gold has given 0% return .

Like this , we see that decision is not carefully thought of with all pros and cons, but rather a very narrow approach.

7. “I could have done much much better” – The feeling of Regret

Every 1 out of 2 people we dealt with told us that they regret what they have done with their finances in past and they wish if they could have done things differently.

More than doing “right things” , these people have done many “wrong things” and that has higher impact (in a negative sense) in their financial lives.

8. The biggest part of Net worth is the House on loan

Almost always the house was the biggest part of the net worth, not the mutual funds , or stocks or fixed deposits .. I think it’s because we mostly deal with middle class or upper middle class salaried investors and house is generally there in the portfolio.

Almost everyone had a big home loan.

9. Too many financial products

Another common issue which we see in most of the cases is that they have too many financial products. Many Fixed Deposits, many LIC policies, too many mutual funds (if any) , various policies ..

These people are more of product collectors who have added something new in their financial life each year when the tax season comes or whenever they had surplus money.

This is one reason that their financial lives gets very complex.

10. Unable to meet Financial goals with current resources

When we check if these investors will be able to achieve their financial goals or not. We find that most of the people are not going to reach their goals easily .. and in some cases they are seriously short of money and are in very bad shape.

It’s like a disaster waiting to happen. Investors are already in the age range of 40-45 yrs . They have some portfolio, but looking at their financial goals, it feels like they will be able to reach just 30-40% of it ..

Bonus #11 – Low Finscore©

So you must be wondering what is this “Finscore©” .. It’s our copyrighted model of evaluating someone’s financial life based on 15 parameters and it gives you a score from 0-100 (something like CIBIL) and almost 8 out of 10 people get a low to average Finscore©.

Do you want to know what is your Finscore©? If Yes, apply for Financial Planning and our team can talk to you regarding the next steps

30 replies on this article “10 things we observed after working with 2,000+ financial planning clients”

  1. karan doshi says:

    The blog which you are posting are really very good and very well explained the reality of financial Planning.It is said that Don’t save what is left after spending but spend what is left after savings.Thanks for giving us this informative blog.
    This is really helpful for me. Thanks and keep posting like this.

    1. Jagoinvestor Admin says:

      Hey karan doshi

      Glad to know that you liked the article.

      Please share it on your social media profile so that it can reach more and more people !


  2. Vikram says:

    Nice Article Manish, thank you for jotting down all the points. It’s time for introspection.

    1. Jagoinvestor Admin says:

      Thanks for your comment Vikram .. Please keep sharing your views like this..


  3. Amitabh says:

    Very good article… I can relate to it

    1. Jagoinvestor Admin says:

      Thanks for your comment Amitabh .. Please keep sharing your views like this..


  4. Umar rasheed says:

    Very very useful and helpful article.

    1. Jagoinvestor Admin says:

      Thanks for your comment Umar rasheed .. Please keep sharing your views like this..


  5. Anny says:

    for this valuable knowledge.

    1. Jagoinvestor Admin says:

      Thanks for comment Anny

  6. subhankar says:

    Nice guide. Thanks

    1. Jagoinvestor Admin says:

      Hi subhankar
      Thanks for comment

  7. Mohit says:

    Genuine article. I relate myself with all yhe 10 points

    1. Jagoinvestor says:

      Thanks for sharing that !

  8. Mohit Goyal says:

    Hi Manish,

    very interesting.
    and you have left the “perfect dangling carrot” at the end – Finscore! haha.

    Now I am hooked too (even though I “think” I am doing reasonably okay with my own fin-planning.

    How to get the Finscore checked? Is there an excel file wherein I need to plug my numbers and bingo? please educate.

    1. Jagoinvestor says:

      Hi Mohit ..

      Finscore is FREE if you want to check your score ! .. I can have some one from my team do the discussion with you on some important points if you can fill in your details .

      Will mail you separately


  9. Asish Bhattacharya says:

    Hi Manish,

    Nice article. Also would love to see a workshop happening in near future in Hyderabad.

    Liked your summary of leanings and observations. my observations on some of the points.

    #1 i typically am not quite agile to do it myself so i take an alternate approach of doing all expense from one bank AC which my wife and myself jointly own, with a fixed inflow. So its always in check.

    #2 Will it not be better if title is changed to “The Legacy of Endowment policy”. Does my comment makes sense? though i havent got any first hand experience with LIC what i have read is LIC as a company is not bad as it has one of the highest claim settlement ratio. https://www.mintwise.com/blog/claim-settlement-ratio-2015-2016/

    #9 most of the financial advisers i have worked with, will recommend MF however some of them will go for over diversification in Mutual funds. Probably it will be good to see an article on over diversification from you. if there is one already could you point me to it?


    1. Jagoinvestor says:

      2. Yes, its a good idea .. LIC a company is good, but its policies are not suitable for those who are seeking inflation beating returns .

      9. Yes, I can write on that very soon


  10. Rahul Yalshetty says:

    Very well summarized, Thanks Manish!

    1. Jagoinvestor Admin says:

      Hi Rahul Yalshetty
      Thanks for comment

  11. Sanjeev Dadhe says:

    I liked the first point. I myself do not know how much money I spend each month. When I worked in India, the salary was barely enough to last a full month. After moving out from India 22 years ago, now my earnings are much nigher than the monthly expenses. A major portion of the money is saved. I have no debt, or insurance. Have invested in shares during the crisis of 2008-09, and have invested in mutual funds during last three years.
    The problem is that a normal person does not know how much money to put in shares, mutual funds and in deposits. I feel that I have too much money in savings accounts which do not give much interest.

    1. Jagoinvestor Admin says:

      Hi {Name}
      Thanks for sharing your opinion. Yes its true, a lot of people are still unaware about share market and mutual funds investment. As you said you are not earning much interest on your hard earned money because it is in savings account, our team can help you if you want any support.

  12. Alok says:

    Nicely summarized Manish. These points should act as an eye opener for people delaying their start of investment journey. But somewhere I strongly feel that we should have a subject related with money management at school level. Of course, that is not in our hand but still…

    1. Jagoinvestor Admin says:

      Hi Alok
      It’s a good suggestion to have a subject of money management at school or college level. People just don’t realize the power of compounding which helps them in the process of wealth creation if they start investing early though with a little amount. Thanks for your suggestion.

    1. Jagoinvestor Admin says:

      Thanks for your comment Rahul kumar vishwakarma .. Please keep sharing your views like this..


  13. Ritz says:

    Hi Manish

    Nice article. But I have one doubt, do people actually consider self occupied home as their net worth? And do you guys also consider the house (self occupied) as their net worth?

    1. Jagoinvestor says:

      Yes people consider it as part of their networth.

      We dont think it should be part of networth in normal cases , like if you are calcuting for life insurance or for your retirement corpus, then you should not consider it part of your networth. But if someone is calculating his over all worth in WORST CASES .. where you have to sell off every bit of what you own , then obviously you need to take it into consideration ..


  14. Kiran says:

    Good summary. Some of the people I know personally, have started their career since 6-10 years but have not done any savings and think that EPF and LIC(traditional policies) would suffice. Whether its insurance, mutual funds, etc.. start early to get more benefits. My tip : Start a simple tax saving SIP as you get first salary.

    1. Jagoinvestor Admin says:

      Thanks for your comment Kiran .. Please keep sharing your views like this..


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