Financial planning is not a onetime event; it is a process

Source : : IRIS (23 July 2009)

In an attempt to understand what is happening to the financial planning market and what influences investor confidence most, Yogita khatri of Myiris.com managed to get an exclusive interview with Aadil Kadri, Manager - Advisory, Continental Financial Services. Aadil Kadri is a Manager - Advisory, Continental Financial Services. From humble beginnings as an average academic and struggling salesman, this Indian Professional Financial Advisor has clawed his way to the top of his profession. Aadil is a qualified and result oriented Certified Financial Planner (CFPCM) from Financial Planning Standards Board (FPSB) – India. He has a strong business acumen in advising Individual and Corporate Clients on securing their Financial future based on their personal and professional goals. Aadil has been advising clients on a range of financial services for over 13 years. A dynamic individual, Aadil, believes in leading from the front and is passionate about spreading financial awareness and the need for proper Financial Planning.

What led you to choose financial planning as a career?

I have started working with my father who used to be an LIC agent for brief stint from 1986 -1991 after he retired and I was helping him paying the premiums for the client and taking him on our scooter in Baroda - India out for a client meeting. To tell you the truth I was not happy with what my father was doing at that time and I use to actually hate this industry where my father used to convince people for their own benefits. After my college I got an opportunity to sell a concept of TIMESHARE with one of the reputed companies in India. It was then I realize that even I can also convince people. I have started thinking that it is same thing which my father was doing with a little difference and that is I was convincing clients to spend the money on timeshare (holidays) and my father was convincing clients to save the money for securing their financial future. It was then I decided to choose financial planning as a career because this is what will make me happy as my clients will always remember me and my services for a long time.

What is your take on current market situation?

How do you see the market going forward? I always believe and guarantee 3 market scenarios to my clients:

1. The market is going to go up.

2. The market is going to go down.

3. The market is going to remain flat… (There is no 4th option).

In either of this 3 conditions if your Objectives are defined and analyzed properly with a proper ASSET ALLOCATION set in place depending upon your age, objectives, goals and risk appetite, the markets are least to be bothered about.

What services do you offer? How long have you been advising clients?

I am associated with a Financial Services Company and we have number of products to offer from our range of companies we have tied up as our channel partners. We offer Protection Plans, Savings Plans, Mutual Funds and Medical Insurance.- I have been advising clients from more than a decade… to be precise this is my 13th year in the industry.> Briefly explain the investment / selling scenario of the financial products you offer in current market?In this current market what I do is to build a relationship in my first meeting and assess client`s objectives and requirements as per his GOALS and aspirations. Once that is done… depending upon his priority and budget I recommend him solutions. I strictly follow the Financial Planning process. The biggest ASSET an individual is having is an ``Ability to earn an income``. What I do is to see that it is properly secured before I advise him to look for any other savings / investments.

How important is an independent financial advisor (IFA) in the total sales process?

An independent financial advisor and that also if he is a multi tied product provider it is always an advantage for the client because a multi tied IFA will not be biased on promoting the product from the same company unlike the tied agents. In this situation the IFA will give the product from the gamut of products which is in the best interest of the client. An IFA who has a CFP certification is always an added advantage for the clients as he takes the client through a process of Financial Planning and advises unbiased recommendations.

In today`s fluctuating market conditions, what`s been the most common reaction from your clients?

It`s a very important question which you have asked and let me explain you in detail keeping in view this market especially NRI`s in UAE. (I am sure it is more or less the same situation everywhere in the world). What has happened is that during the boom phase i.e. 2003 - 2007, investors have made lots of money. The whole of the economy was booming. Every individual or company has started making lots of profits from the business / investments. Salaries have been increasing across the board. During that phase investors/clients have taken huge commitment mainly by way of Housing loans or car loans or any other commitments. They have not understood the nature of the market and they have not done proper Asset Allocation. But now what I feel is that clients are much aware and cautious before jumping in any impulsive decisions. I am sure this financial turmoil or crises (whatever we say) will be the best lesson learned by all investors (including myself).

How many clients do you currently manage?

I have clients around 150 quality clients in total, which I have made over a period in the industry. What I mean by quality clients is that these same clients keep on enhancing their own business or they keep on referring their friends / colleagues / relatives. One has to understand financial planning is not a onetime event it is a process and has to be reviewed periodically as the circumstances and life situations keep on changing for an individual. This is the reason why it is always important to keep an honest relationship with the client and help them plan their financial future.

What do you think influences investor confidence most?

Do you think investor confidence is improving?In the age of Internet and media what clients require is not the products and the information on the product. Many a time`s clients know more about the product than an IFA.What investor wants to know from an IFA is that how this product is going to help them and their family for securing their financial future. If you want to influence the confidence of an investor do not try to sell them a product, but help them to buy a solution for their problems. Investors confidence is increasing day by day and the credit goes to the regulators i.e. SEBI / IRDA / RBI because of their strict norms and rules & regulations which is not allowing the product providers or IFA`s to do anything which is not in the best of their clients interest.

Keep track of money, make life simpler

"It helps to keep the beneficiaries and a well-wisher informed about your investments"

Aadil Kadri/DNA Money/Monday, July 21, 2008 3:06:00 AM

Mark Twain has often been quoted as saying -- "Everybody talks about the weather, but nobody does anything about it."
Now, replace the word 'weather' with 'record keeping' and you will come to know what I mean.
There must be thousands of articles written on record-keeping, lots of preaching and teachings given by our elders on it. But, over a period of time and, to my surprise, many of my prospects, clients and friends have not done any record-keeping and even if they have, they are not in order.
In layman's language, record-keeping is to know and keep track of all important documents. Now, let me explain why it is so important.
Being in the financial planning industry for over a decade, I have come across one of the most tragic and sad events of my life, which has compelled me to think very strongly about record-keeping.
One of my prospects' family suffered for not keeping records properly. Mr and Mrs VIP, a family of four, had settled in Dubai. Mr VIP was in his early 40s, wife in her late 30s and had a seven-year-old son and a three-year-old daughter.
In January 2006, as a routine, I started calling up all my prospects to greet them for the New Year and also fix up appointments.
When I called up Mr VIP, the receptionist at his office said he had passed away. The news was shocking, but it was more shocking to know that his wife, who was an educated lady, did not know anything of her husband's investments and savings. I wondered why Mr VIP hadn't shared his investment details with his wife. To make the matters worse, he hadn't kept his important financial documents in a designated place.Mr VIP's wife was facing the consequences of not keeping records. Hithero, a homemaker, now she had to work to meet her family's expenses.
I advised her to check the post regularly, as banks, investments and insurance firms mostly correspond throughpostal services.
We also asked Mr VIP's friends whether they had done anyinvestments/savings/insurance/bank account, etc together. (as collegues often invest together in lucrative portfolios).
One day, while we were checking the mail, we got hold of some important documents regarding a FCNR deposit amounting to $50,000, which was about to mature in a month's time.
Now, the wife had to arrange and post all the relevent documents regarding the FCNR to redeem it.
At this juncture, I really felt the importance of teaching banking basics to all family members, including children.
Finally, we did manage to get the money, but with great difficulties.The whole situation would have been easier if Mr VIP had informed his wife and a well-wisher of the family about his investment details.
The reason why a third party has to be involved is, because, we cannot rule out the possibility of husband and wife dying together.
As a financial planner, I would advise the readers to start making a note of all the important papers such as bank account details, fixed deposits, mutual funds folio number, insurance policy number, property papers, jewellery bills, etc.
Keep all the original papers in proper order and at the right place. It should be a rough version of a will.
I also advise to keep updating it every six months. Keep all the papers in a place, which is easily accessible to your beneficiaries. If possible, give a copy in a sealed envelope to one of your relatives or a well-wisher, who will act as an executor after your death and help your beneficiaries get the money.
One good thing in this country is that direct taxation compels an individual to keep records for the tax authorities, if not for the wife or relatives.
Keeping a record of your possessions helps us to be disciplined and organised. This exercise will give you peace of mind.

The writer is a certified financial planner and full member of FPSBIndia and a qualified member of the Million Dollar Round Table inDubai, UAE. FPSB India relies on its members' prudence, competence, and ethical standards to have submitted this write up in good faith in theirpersonal respective capacities. The article and the views are those of the writer and do not represent those of FPSB India. Readers are advised to consult their professional financial planners for advice. Feedback to this article may be mailed to aadil.kadri@gmail.com

Choose a good Life over a Bad Debts

Do not fall into trap of credit cards
" Mr. Graduate’s irrational ways of using credit cards and opting for loans lead him to pay 20-25% of his salary in clearing credit cards "

Aadil Kadri/ DNA MONEY 2008-07-14 13:12:53

I feel that in academics, one of the subjects that should be included is – 'Threats of credit cards and personal loans’. I have been advising expat community in the UAE on the 'importance of financial planning’ for almost a decade. This is a general scenario in 6 out of 10 cases coming to the UAE.
A small piece of advice could be of great help to young graduates who are planning to make their fortunes in the Gulf. Minor issues such as credit card and personal loan threats at an individual level lead to major issues such as subprime crisis.
Open the newspapers or log on to the sites of recruitment agencies–one thing that grabs the attention of a fresh graduate from a middle-class community is the opportunity to work in the Gulf. The job offers an average salary that is either on par with or more than what the graduate would make in India.
Mr Graduate, with big dreams and aspirations, was ready to relocate to the UAE for many reasons, mainly to improve his standard of living or to establish a platform to go to developed countries such as the UK or Australia or Canada, among others.
He worked for a multinational company and drew a decent salary.
His first year’s salary went into clearing debts and sending money back home to improve the standard of living of his family (parents). The moment his lifestyle was adjusted and tuned to the hot summer of the Gulf, the family back home compelled him to marry.
One thing that he could have done is started some regular savings habits.
Mr Graduate, after working in the UAE for one year, got married and decided to bring his family to the UAE. The moment his wife came, he was forced to go in for a studio or a one-bedroom flat after previously staying in a bachelor’s accommodation.
The rent of the flat was 30% of his annual salary. Now, he had to furnish the house and shell out a huge chunk of money from his pocket.
For a drowning man even a feather’s support was enough. Enter credit card companies that were ready to give him a credit limit of thrice his salary and thus instigate him to spend to the last penny of limits allocated, with a sales pitch of 'only’ 3% charge and loads of offers.
Mr Graduate, without understanding the consequences of spending beyond his capacity (3% monthly = 36% yearly) ended up paying almost 10-12% of his monthly salary in credit card bills.
Because of the financial pressures, his wife started working and now two salaries were coming into the house.
In this situation, they should have paid off the credit card bills and enjoyed a debt-free life. But, the couple made a mistake. They increased their standard of living and the situation went from bad to worse.
To give him relief from huge credit card bills, a personal loan executive of the same bank offered a loan of up to one year of Mr Graduate’s salary. It came as a saviour and the couple were compelled to take the loan up as there was no other alternative.
Once money was in hand, even threats become opportunities in disguise. Mr Graduate took the personal loan to clear off debts, but spent it on furnishing the house.
Therefore, he ended up paying interest not only to credit cards, but also for the personal loan.
In the middle of all this, he got a driving licence and the dream of driving the best car compelled him to buy a brand new one. The best part was that he did not have to pay immediately, as the car was financed by the bank and his actual instalments started after three months of purchase.
Mr Graduate was in the company of friends who believed –“Live for today because who has seen tomorrow? Enjoy buddy!”
Now, how could he deny himself the pleasure of having the best mobile phone with latest features and the best watch when credit cards were there to help? To sum it up –before he actually realised what he had done, he ended up paying almost 20-25% of his salary in instalments for his short-term aspirations and dreams.
At this point of time, he could have gone for a decent secondhand car.
Mr Graduate, who came here to make money, ended up earning money for paying credit card bills, personal loans and house rent.
After talking to him, Mr Graduate confessed that he would have been much happier back home with the same lifestyle and less stress, than coming to this part of the world.
By the time he realised that he had come to the Gulf not only to make money, fulfil his dreams and aspirations, but also to save money, it was time to go back home.
Do not fall into credit cards trap and do not live beyond means.
Life in the Gulf is even more challenging than we think. The amount you earn during your working life not only goes towards taking care of your regular expenses –eating, buying lifestyle items, entertainment, and so on–it also needs to meet your aspirations, such as buying a house, paying for your children’s education, marriage, retirement and others.
The moral of the above story is “Pay yourself first” before you pay to credit cards, personal loans, and rent authorities.
(It is a true story of an NRI, whom the writer met recently. Mr Graduate’s real name has been withheld).

The writer is a certified financial planner and full member of FPSB India, and currently based in Dubai.
FPSB India relies on its Members’ prudence, competence, and ethical standards to have submitted this write up in good faith in their personal respective capacities. The article and the views are those of the writer and do not represent those of FPSB India.

Readers are advised to consult their professional financial planners for advice.
Feedback to this article may be mailed to aadil.kadri@gmail.com

If you would like to be advised and need a financial plan made by a qualified planner, mail to: aadil.kadri@gmail.com

We all have different reasons for leaving, now you must arrive

I have been in this region and industry for more than a decade advising the expat community, including many from India, on financial planning.


Each and every expat has a defined reason for leaving his childhood home and immediate family and coming to this region. They come because they want to earn money. They come because they want exposure to a foreign country and an international working environment. They come for better education and medical facilities. Mostly, though, they come to improve standards of living.

Financial planning is an important part of achieving this. Circumstances vary, and a plan that works for you might not be appropriate for your neighbour. But when we talk about financial planning, there are certain steps that every expat needs to consider.

The first one is life insurance. I feel that the most important thing an expat should do after settling down is to insure himself or herself with a life insurance policy that covers all liabilities – for example, car, personal and housing loans. It should also cover future financial responsibilities, such as maintaining the family’s standard of living, education and marriage expenses for children.

One of an individual’s greatest assets is his or her ability to earn income, and
this has to be protected adequately by way of a life insurance policy.

“Insurance is not to be taken because you are going to die,” as the saying goes,
“but because someone is going to live”.

Insurance and critical-illness insurance are also high-priority areas to consider in financial planning, as they cover the direct and indirect costs of getting sick and getting treatment.

You will need a personal medical insurance policy if you are not covered by a company, although UAE law now requires all firms to insure their employees. Medical insurance should cover everything from normal day-today treatment for cough and cold to major illnesses and hospitalisation in case of an emergency. Since the cost of having a baby in this part of the world is very high, it is advisable for young married couples to choose a medical insurance plan with maternity cover.

You should also think about critical illness insurance. Critical illness is indemnity insurance that pays the face amount of the policy to the insured in a lump sum upon the diagnosis of specified condition – heart disease, cancer, stroke, kidney failure and so forth. History shows that 10 years of your life savings can be wiped out by one critical illness.

The next basic financial-planning issue to think about is retirement planning.
One thing I feel is a major concern for expats is that they are not saving enough or are unable to save for the future and retirement. The kinds of luxuries and opportunities to indulge that are abundant in this region make us spend beyond our capacity. On top of that, credit cards and personal loans promoted by many financial institutions encourage us to spend more and more on bigger houses, better interiors, expensive cars, the latest mobiles and meals in fancy restaurants.

One of the things I liked about India, where I am from, is that the government encourages individuals to save to avail tax benefits on their income. Unfortunately, that facility is not available in this region. For example, even the basic gratuity (as per UAE law) is sometimes not given at the time of retirement, even after an individual has worked for many years for a private company.

During the course of my working life, I have seen two groups of people. Group one spends first and then saves a little bit if anything is left. Group two saves first and then spends.Many expats are in group one, though they want to be in group two. However, they find it very difficult to make the transition. Unless and until they start a disciplined and regular savings plan, putting away a few percentage points of their income every month, they will probably not get in the habit of saving. The best course for them is to consult a qualified financial planner and start a regular savings plan. I have observed that, because of a lack of savings, expats often find it difficult to maintain their desired standard of living when they go back to their home countries.

An average person lives for 15 to 20 years after retirement, mainly thanks to medical advancements. All of the savings they have built up for 30 years gets wiped out in five to seven years to maintain the standard of living they are accustomed to while they were working. Their only alternatives are to lower their standard of living or compromise in other ways.

Another big component of financial planning is saving for education. One major responsibility and invaluable asset that any parent can give to their children is an education. But inflation is making that more difficult; the sooner you start saving for eduction, the better. A financial planner can help you design a tailor-made savings plan to do this. Education, as George Peabody said, is “a debt due from present to future generations”.

Finally, I always recommend that expats keep records of all investments, savings plans, life insurance policies, bank accounts details, loans and debts on an excel sheet or a simple piece of paper and share it with their spouses. This makes life for the rest of the family easy in case an unforeseen accident strikes.

Mr Kadri is a certified financial planner based in Dubai