After the former Chairman of SEBI (Securities and Exchange Board of India) Mr C.B. Bhave abolished entry load (with effect from August 1, 2009), 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, wherein you sit with a professional financial planner and divulge your personal financial information for him to draw an unbiased financial plan which helps you in achieving your financial goal(s).

• Age
• Income
• Expenses
• Number of dependents
• Risk appetite
• Financial goals
• Nearness to financial goal

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:
The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.