1. #1

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    Have financial planners failed financial planning in Pakistan?

    Financial planning as a profession has not taken off in Pakistan very well. There are very few people who are ready to pay for financial planning. People are keen to pay for investment management but not for financial planning. Who is to be blamed for this? While many factors can be held responsible for this, financial planners cannot wash their hands off from this. Financial planners are becoming too predictable in Pakistan. Read any document on financial planning in the newspapers and magazines or watch business news channels, most of the time financial planners are found writing or advising same thing. Financial planning advisory has become so predictable that there is no even an iota of innovation in this.

    For instance, every financial planner is found recommending diversified mutual fund as a part of the portfolio.

    Whatever be the profile of the investor, the recommendation is almost same. Let us look at some of the basic questions. Why should every investor invest in diversified mutual fund?

    Is there a guarantee that this will create wealth? There are diversified mutual funds which have failed and there are some which have reasonably successful.

    So how does diversified mutual fund fit into the scheme of financial planning?

    How can the recommendation be so generic?

    Why not recommend some good mid-cap funds to the individuals who have the ability and appetite to take risk. Similarly why not invest in good equity shares directly?

    If you ready to take risk of failing in mutual fund investment, why not the same risk in shares of some very established companies?

    Is it that some of the planners are getting more money from selling financial products than financial advisory and find comfort in this?

    Look at another example. Every financial planner takes into consideration inflation as a factor for deciding how much money will be required by an individual in future say post retirement. A convenient rate of inflation is applied by the planner and the amount of wealth required for the individual concerned is calculated. Some take WPI or CPI data and derive corpus required post retirement.

    Do WPI and CPI impact every individual similarly?

    The answer is an emphatic no. Then how can these benchmarks be used for identifying impact of inflation.

    Shouldn’t a planner add value to the client by identifying how a client will get impacted by inflation?

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