Frequently Asked Questions

Things were quite simple about 30 years back. There were FDs, RDs, Small Savings schemes & PPF. Insurance was essentially Endowment or Moneyback plans. Medical insurance was unheard of. Equity markets were not accessed by most. MFs were not there. Also, thankfully, the interest that one could get was in double digits. With low risk, one was able to get high returns.

Their requirements were few. Most from the previous generation were frugal ( there was not much choice ). They saved what they could & since everyone else was also like them, they did not feel there was anything wrong. They did not take loans & believed in living within their means.

Things have changed considerably since then. The salaries which people earn today have shot up. The aspirations have gone to the stratosphere as well. To take care of these lofty goals, one would need to save a lot more.

The financial markets in the meanwhile have matured and are offering a rich variety of choices, which were just not there, a few decades back. Managing money has hence become a lot more complicated now, than ever before.

The amounts that are needed for the goals are high & the stakes are very high indeed.

People also have become very busy & are not able to devote time to understand their needs/ goals, what are the alternative scenarios/ strategies that they need to consider, what should be the mix of assets they need to have, which specific products would be suitable, implementing & managing the investments is not easy. People do not have the inclination, knowledge & time for these.

Considering the above, the complexities in terms of product offerings, the pretty high stakes, a good financial advisor becomes necessary.

A financial planner works with the client to achieve their cherished goals in the time-frames that the client wants.

Each person’s personal situation is different – their goals, dependencies, income levels, commitments, risk tolerance, number of working years etc.

A good financial planner will take into account all these and then put together an investment portfolio that is best suited for that person. Hence, the equity or other growth assets in their portfolio will vary from person to person, as per the dictates of that person’s situation.

What one needs to understand is that the Financial Planner/ Adviser is not trying to maximise returns- s/he is trying to put together a portfolio that would suit their clients best. Since the Financial Planner is anyway working towards meeting the goals of the client and has put together a portfolio that is tailored towards that, returns are not something a financial planner will obsess over.

However, a financial planner would know quite well about the products recommended and would know the risk-reward possibilities of that product. They would hence suggest the best product in each asset-class considering various parameters, which includes returns as well. It is just that they do not focus on returns alone, unlike product sellers.

Many people tend to think that they just want advice to invest the amount they have at that point.

Without understanding the client context, their goals, their personal situation & what they have done till then, it is not possible to suggest where they need to invest.

We need to understand that investments are done to achieve certain goals or satisfy certain needs at specific points. Hence, it is important to comprehensively examine the whole client situation before offering portfolio advice. That happens only when a Financial Plan is created for the client.

When one goes to a Financial Planner, they would like to understand comprehensively the client’s situation. They seek to do a 360 degree, in-depth study of the client’s position, look at alternative scenarios, evolve strategies that would offer clients the best outcomes & finally recommending them the course of action.

If they have to do all this, the financial planner would need complete information so that they may be able to do their best work for their client.

Working with a financial planner is like working with a Doctor. One needs to disclose all the symptoms and other necessary background information for the Doctor to be able to come up with the right diagnosis & the treatment. Just like that, one needs to disclose everything to a Financial Advisor/ Planner, so that s/he may be able to come up with what is truly right for the client. It is hence in the best interest of the client to share all the information with the Financial Planner/ Advisor.

Financial Planners, especially those who are SEBI Registered Investment Advisers ( RIA ) [ like us ] have to ensure confidentiality of the information that they have gathered from the clients. They would enter into an agreement with their clients where they would expressly disclose the data confidentiality. So one need not worry about that aspect.

Financial Planning is meant for all those who want to systematically achieve their life goals, through proper financial management. There is no specific age or station in life to pursue this. It is certainly not meant for the rich alone. A good financial plan will pay for itself.

In fact, it may be even more critical for those who are less well endowed, as they cannot afford to get their money management wrong. Financial Planning works very well for all. It is for anyone who is interested in sorting out their finances. It works for all those who are serious about getting a path laid out and following that path.

There is also another school of thought that financial planning is not needed for the rich – for their basic goals are all met. But rich have their own goals – philanthrophy, ensuring that the next generation learns how to handle wealth and ensure continued well-being of the family. They require sound advice even more. Ultimately, even this requires planning & wealth management.

You need to engage a financial planner based on their skills, experience, expertise in the area, the quality of advice and other such parameters. Since good quality financial planners/ advisors are hard to come by, it would be wise to broaden the search beyond where you live.

You will be paying for professional, ethical advice which will help you manage your finances better, achieve your long-term financial objectives and get better returns, overall. A financial plan gives you clarity about goal achievement, direction you need to take, interplay of the effect of various goals and the commitments required for them, choice of appropriate investment vehicles for the intended purposes etc. Also, there would be better management of funds and consequently, the possibility of better returns.

The planner assigned for the job will be one who has appropriate education credentials ( like CFP Certification ) & have experience in creating financial plans and offering advice. We only recruit those who have completed the education requirements of the Certified Financial Planner program, to ensure an excellent experience for you.  In fact in our process, there will be three qualified financial planners, assigned when a plan is underway for a client. 

We also have registered ourselves under Investment Adviser (IA) Regulations, 2013 of SEBI, where we have subjected ourselves to much higher levels of compliance & standards. The education and certification requirements for the IA & their representatives are again of a higher order and we comply with that standard. Hence, you need not worry about the quality of the people who will be assigned.

A CA is an accountant who helps you in the compliance of govt. regulations and tax. He does not advise on financial planning. Helping people to crystalise their objectives, and drawing and implementing a plan, taking into account their investment, risk, tax, retirement and other aspects, is the work of a Financial Planner.

Financial planners do not give any implicit / explicit guarantee of returns. What a Financial Planner brings into being, is a well-orchestrated plan which will be able to achieve the goals in the time frame specified, through proper financial management. Better management of finances could incidentally result in higher than median returns – but that is incidental to the process.

A Financial Planner is like a doctor. Only when you make a complete disclosure would a planner be able to come up with appropriate solutions. Half information given would ensure that the plan is inaccurate. Trust is important in this relationship. Confidentiality of data is assured with us. Hence, in your best interests, you should disclose full & correct information.

Financial Planners do not file tax returns. That is actually the domain of Chartered Accountants and Tax consultants.

Insurance Advisor is attached to a company and wants to sell his company’s policies. Also, he may push products where his interests lie and not necessarily ones that suit your needs. A distributor may again push schemes which give him maximum brokerage. They do this as that is the only way they are remunerated and they are from the company’s side. We are from the client’s side and look at what is most beneficial in terms of fit and costs. Since we are paid fees by our clients, we retain our independence and advise without prejudice. Apart from that, since the financial planner knows the overall picture, the advise will be a lot more specific and will fit well.

Also like we mentioned before we are Registered Investment Advisers under SEBI and have assumed fiduciary responsibility. We are fee-only financial planners & advisers. It is in your interest to seek us out.

The focus of a financial planning exercise is to ensure that the goals & objectives are met in the required timeframes in a pre-meditated, planned manner.  For that, the client’s personal circumstances & financial situation needs to be taken into account.

Also, various parameters like liquidity, risk-reward sought, taxation, income needs, tenure etc. need to be considered before choosing the appropriate investments.

Hence, the portfolio put together will be a factor of what is needed for the client in terms of investment asset mix. We will choose the best possible options within each asset class suggested. The returns are hence going to be determined by the asset mix and the allocations in various asset classes.

To conclude, the focus is not on the returns and is more on meeting the life requirements of the client at various stages in their lives.

Financial Planners & Advisors who work on a fee-only model, charge a fee from their clients which is their only source of revenue.

They represent their clients, work in their best interests and are conflict-free. They are independent and are not agents of a bank, Insurance co., etc. They do not peddle products and do not earn commissions. They will recommend commission-free products/ low- cost products wherever available. This means that they will not push products based on which one gives them the highest commissions.

Distributors may earn the same amount as fee-only advisors. But they represent the principal as their agents and do their bidding. They sell products that offer the best commissions to them, not necessarily the best for the client. Hence, there is a clear conflict of interest, which is accentuated by targets they need to meet.

Fee-only advisors may charge the same but you need not second guess what they are recommending. Also, fee-only advisors are better qualified and meet high standards prescribed to them by regulation in every sphere. If the client is indeed paying the same amount, why not get the advantage conferred by a true advisor?

Every advisor has a proposition to offer. As a client, you should evaluate the proposition in its entirety on merits. Fee charged will depend on the service offering, its width and depth.

In our case, we are SEBI Registered Investment Advisers (RIA) and work on a fee-only model, which means the only mode by which we earn is through fees we charge our clients. We deploy three qualified advisers in our financial planning process, which gives depth, perspective and wisdom of three minds. As opposed to that, many advisors feed the data into a software which gives a canned plan and report. This kind of a plan will take just 2-4 hours to prepare.

We have a collaborative model while building the plan, where we discuss with the clients, understand their requirements and build the plan up to a level. Then we present the plan and take client feedback and proceed on further building of the plan.

The plan built this way comes out as a fully tailor-made plan, fitting the clients needs like a glove. We spend between 60-80 hours on a plan. The fee we charge per hour is one of the lowest.

Also many advisors charge a fee and also earn commissions on products, which is why their fee is low in the first place. Look the gift horse in its mouth!

A life planning session is to understand one’s deepest motivations and what we truly desire to achieve in our lives, understand what will give us happiness, satisfaction, fulfilment etc. 

It is important to understand what we want to do in life and hence what goals are truly important for us. It is ideal to plan one’s finances based on the uncovered heart-felt goals.

Hence, it is ideal to first do the Life plan as a prelude to the financial plan. However, many people are not keen on doing this as they feel that while planning finances such deep introspection is hardly necessary.

Our own opinion is that there needs to be a maturity & willingness to look at the present life and be willing to reconfigure it to make it a whole lot better. This is hence recommended to a small sliver of our clients only. For the vast majority, we just do the financial plan based on their goals.

We are engaging with our clients as advisers in which case the only source of revenue is the fee, we are charging them.

We do not receive any other remuneration from product manufacturers which can distract us from the goal of being client-centric advisers. We put the best interests of the clients, first and foremost.

When we are on the fee-only model, we are independent and conflict-free, which is very beneficial for our clients.

We are dealing with clients and their data as a part of our business. Data confidentiality is hence an integral part of our business.

We are registered as Investment Advisers (RIA) with SEBI, where one of the stipulations is that we cannot share any client data with anyone else, without the client’s knowledge. We hence abide by that.

We also have entered into a binding confidentiality agreement with every employee at Ladder7 during employment which stipulates that they cannot share any data pertaining to Ladder7 or its clients during the employment period and even after they cease to work at Ladder7.

We also enter into a Service Engagement Agreement with our clients where we explicitly have a clause that we will not share or sell client data and we sign that off.

Hence, rest assured that we take data confidentiality very seriously at Ladder7 and are looking forward to ensure good outcomes for our clients.

A fee-only adviser is someone who charges the client and acts only in their best interests. A fee-only adviser is independent, conflict-free and acts in a fiduciary capacity to their clients. Their only revenue source is the fee they charge to their clients.

A fee-based advisor by contrast will charge a fee and also earn commissions and other remuneration from products. In this model the advisor cannot act without conflict as they are acting as agents of a principal ( like a bank, AMC, Insurance company etc. ) and at the same time they provide “advice” to their clients.

It must be amply clear that fee-only model is a much better model for clients.

Before creating a plan, we discuss extensively about everything including personal situation, goals, career etc. Based on the inputs offered we make the plan which is an intensive exercise. We charge for this exercise only.

However, for some unforeseen reason if the situation changes majorly and we need to redo the plan, we will have to do the exercise all over again. Hence, this becomes a new engagement for us and will need to charge for it.

The book by Suresh Sadagopan helps one understand financial planning & personal finance concepts in an easy-to-understand format. Financial concepts and information is presented through a story, making it easily accessible to readers. Understanding finance becomes easy this way.

However, just by reading the book one will not be able to create a financial plan, the way professionals create it. That is not the objective of the book. This book is not a DIY book on how to do your own financial planning.

SEBI Investment Adviser Regulations have come into being to create a new class of fee-only advisors, who are independent and represent only the clients and work in their best interests. This eliminates any conflict of interests and ensures that the adviser works truly in the client’s true interests only.

RIAs have a Fiduciary responsibility towards their clients. That means they need to put the client’s interest ahead of everything else, including their own self interests. This means that RIAs can be truly trusted to do the right thing and one need not have to double check the advice being given.

RIAs have to meet higher education standards like a Post-graduation, have at least five years experience in financial area as also have an appropriate certification on Financial Planning. They also need comply with various rules & standards set by SEBI.

They need to follow due process while offering advice. They need to do a risk profiling for their clients to understand their ability to assume risks on investments, arrive at advice by a proper, robust, preferably documented process, ensure suitability of advice for the client on all factors impacting them among other things.

RIAs are an advisory community which has been created specifically to dispense high quality advice. Hence, RIAs are the right advisers who the investors can trust to guide them on finances.

Ladder7 is an advisory firm, with many advisers to guide the client. Hence, when a client comes to Ladder7, there will be advisers assigned to them, who will engage with them and offer counsel. Advisor assignment will also be based on the services being opted for.

We take care to ensure that clients have a consistent experience in service delivery through our advisors. To that end, advisors follow a clearly laid down process while offering advisories. Hence, the advice being offered will be uniformly good as service delivery will be as per our guidelines for each service.

There are associate advisors, Senior Advisors, Principal advisors who may get involved in a case, as appropriate.