There is yet another option for those looking for help to plan their finances. ICICI Securities on Tuesday launched its bouquet of financial planning advisory services — including basic financial planning, portfolio evaluation services and estate planning.
ICICI Securities will offer its services through the offline and online routes. In case of the former, individuals can interact with their planner directly. The latter, though, is presently available only for ICICI Direct customers, as it operates on a login basis, according to Abhishake Mathur, senior vice president, financial planning services, ICICI Securities.
Here's how the online model works: Existing customers can log on to their account, choose the financial planning services option and fill details such as family income, expenses and savings, goals, etc. After this, they can proceed to seek an appointment with the financial planner for discussions. The planner would take seven to 10 days to formulate the plan.
|AT A GLANCE
|Services offered: Financial planning, portfolio evaluation and estate planning
Mode of interaction: Face-to-face or phone interaction
Fees: Rs 5,000 - 7,500 for a basic financial plan
- No sale obligation clause to ensure that advice is unbiased
- A three-month post-plan support offered
- No minimum portfolio size or annual income required
- Concerns about customisation and detailing of plan
- No continual engagement opportunity
The unique selling proposition of the plan for many may be the 'no sale obligation' clause. That is, the customer isn’t obliged to purchase products from ICICI group companies and is free to route his investments via other intermediaries. Also, unlike the international financial planning major, Ameriprise, that started its India operations in January, ICICI is not targeting a specific income group. Ameriprise Financial is targeting those with a gross household income between Rs 20 lakh and Rs 1 crore.
ICICI Securities' introductory fee is Rs 5,000 (online) and Rs 7,500 (offline), with a three-month post-plan servicing period, where the client may approach the company for clarifications or tweaking his/her plan. "This is a one-time fee. It may be slashed at the time of plan renewal," says Mathur. He adds that currently these fees will be charged for individual services. Collective pricing, i.e. one for all services being opted together, is still being worked out.
Comparatively, Ameriprise's Envision (a comprehensive financial plan) costs Rs 12,500 a year. It entails a minimum of four sittings or quarterly updates. "The planner will prepare the plan after the first interaction and take stock of the investments and whether the client is reaching the goal(s) in subsequent sittings," says Kapil Narang, COO, Ameriprise Financial India.
Independent financial planners may be the costliest, charging between Rs 5,000 and Rs 20,000 or more. There is no standard pricing mechanism, according to Suresh Sadagopan, a certified financial planner.
The difference in the fees charged is attributed to the engagement level and the detailing of the plan. For instance, a financial planner points out that on account of the low fees charged, some portion of the recommendations may be software- or system-driven. Especially, reservations are voiced in case of the 'online' planning mechanism, where there is no interface between the planner and client. "Financial planning is all about customisation and studying the client's cash flows minutely. Like, the individual may be receiving an additional income as bonus or incentives during the festive season. This spike in the income inflow can be diverted towards investments or loan pre-payments. Such suggestions can be made only through an in-depth dialogue with the client. He would rarely do so voluntarily; he must be prodded for such details," says Sadagopan. Something that is not possible in an online model.
Another grouse one may harbour is the absence of managing and monitoring of the portfolio service in ICICI's bouquet, chiefly because a financial plan cannot be looked at in isolation. One must check regularly if the investments are faring in line with expectations. So, if you enlist an independent advisor's help, he may charge a percentage (0.5-1 per cent) of the portfolio under management and take stock each quarter, if it needs to be tweaked. In ICICI's case, you would have to be proactive. You can approach them for a portfolio evaluation service, a one-time health check for your investments.
Despite the limitations, financial planners welcome ICICI's foray. They say, given the low number of practising certified financial planners, ICICI's large presence may help take the service to a large number of retail investors.