Here is the transcript if you would like to read it instead:

Ram: That is a great question, Susithra. This is indeed true. We see so many financial calculators online which help someone calculate the future value of their goals, or how much their investment is going to be worth in the future. Though goal-based planning forms a crucial part of a financial plan, that is not the whole story. A holistic financial plan tells you how to manage your risks as well.

Most DIY planning often overlooks such qualitative aspects. Typically, we see such DIY planners missing out on creating a buffer/ contingency reserve while making use of such tools. In the case of any emergencies, they would either borrow money or liquidate investments that were meant for their longer-term goals to deal with the emergency.

Susithra: That is a great point on financial plans adding value by focusing on qualitative aspects in addition to the quantitative ones. Adding to this, a professional planner can help build a customized plan after considering an individual’s present financial situation.

So, what other mistakes do you notice people making while managing their finances?


          1. Always have an emergency reserve in liquid instruments such as short-term bank deposits or liquid debt instruments, as this is your first line of defence to shield you from any unexpected events.
          2. Not having proper insurance coverage, in the form of Health and Term insurance can lead to shelling out money for medical treatments whereas a proper plan with higher coverage could have been beneficial.
          3. Differentiation between short-term and long-term goals as well as planning your finances according to them is vital. If there is a shorter-term goal of high importance, investment in volatile and risky asset classes being allocated towards that goal can lead to failure to achieve that goal.
          4. Investing in expensive insurance cum investment policies such as ULIP which are costly as well as command higher premiums have to be reviewed carefully before considering them.
          5. Not diversifying properly, leads to concentrated positions which can derail your financial position in case of a market fall, leading to significant impacts on your goal progress.

These are some of the mistakes that come to mind, which if not addressed can have a major negative impact on the financial lives of people.

This is where the benefits of opting for professional financial planners as a service comes in.

When it comes to wealth creation, the spotlight is often on numbers and other aspects are neglected. Financial Planning through a professional ensures that a more wholesome approach is followed. The focus of a financial plan shifts to developing financial well-being. Financial planning adopts a holistic view and addresses various facets. Regardless of your age or your profession, a financial plan can inculcate discipline to achieve wealth creation.

Susithra: Adding to the above points, I can’t overstate the importance of maintaining a proper budget as well. A budget can ensure that you are aware of how your household or your financial situation is every month, what amount of excess cash would be available, and how to better manage your expenses.

Ram: That is a great point to keep in mind, maintaining a budget is very important. Now for people wondering how to choose a financial planner, Susithra could you explain what to look for in a financial planner before going ahead with their service?

Susithra: There are 3 main things to be kept in mind before choosing a financial planner:-

          1. Firstly, always choose a fee-only financial planning service. Any other service that has tie-ups with banks, mutual funds companies, and insurance firms might not act in your best interest, they may or may not try to push products that can earn them higher commissions. This can lead to a conflict of interest between revenue from selling products v/s better serving their customers.
          2. Secondly, having a process-based service will be better. Having a process ensures that your financial plan is worked on with at most importance and an intense review process is adopted before your plan is delivered to you.
          3. Thirdly, holistic financial planning is the name of the game. Financial planning should be done keeping the entire finical position of the person in mind, only catering to certain aspects of financial planning leaves you vulnerable to other aspects of your financial life.

Adding to these points, reviews from previous clients can also be a good starting point before going ahead with the process.

Ram: Thanks for that Susithra these are some good thumb rules to be kept in mind when choosing your financial planner.

Susithra, with more and more people thinking about retiring early and chasing financial freedom, do you think Financial Planning is a gateway to Financial Freedom?

Susithra: The main objective of financial planning is to draw a roadmap toward your goals so that they can be achieved in a systematic and process-driven manner. If your goal is financial freedom then through financial planning you can achieve it as well.

For someone wanting to retire at 50 instead of 60, proper financial planning can help you save or invest towards this goal in such a way that you can retire early. During the planning process, you must list down your goals, and assign a priority to them. This exercise helps you differentiate between wants and needs. A well-drafted plan helps prioritize your needs over your wants but also keeps an option open to accommodate any unmet goals in the future.

Assessing the risk factors associated with reaching one’s goals is also taken care of by a financial plan. So, a holistic plan can give you that financial freedom at the same time makes you financially ready to meet any emergencies that might come up in the future.

So far we have discussed what financial planning is, and most common mistakes we see people make while managing their finances, and how to choose a financial planner. We also touched upon reaching financial freedom through a financial plan. Can you quickly comment on how ithought can make it happen?

Ram: An exercise in financial planning is worth its weight in gold for wealth creation. A financial plan will objectively analyze the quality of decisions, identify priorities, and address gaps. Over and above this, financial planning helps outline concrete action items that work towards wealth creation.

A financial plan is meant to be customized. There are no one-size fits all solution. We understand that financial planning is a deeply personal experience for every client. Consequently, our financial planning process endeavors not only to address financial concerns but also personal aspirations and wealth creation requirements.

Our team of award-winning financial planners aims to provide a customized holistic investment plan that enables wealth creation for every client.

On that note, we conclude this episode of our podcast. See you on our next episode!

Join our polls on LinkedIn or Twitter. Follow our handle @ithoughtplan for more updates. See you again next month!

Kairos is our monthly podcast series and is purely for educational purposes. Please subscribe to our podcast and hit the bell to receive a notification. You can write to us with your queries at or visit our website at

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