In an interview with Pooja Chopra Goel of Myiris.com, Narendra Kondajji, Director, Procyon Financial Planners (P) explains why it is so important to start planning for your retirement today.
Can you tell us about `Procyon Financial Planners (P)` and its mission & services? What services do you offer?
Procyon Financial Planners (P) was founded in Bangalore in the year 2006 by two of the CFPs who graduated in 2005 and 2006. So we were pioneers.
We offer fee-based financial planning and investment advisory services to our clients. We provide holistic services to our high-end clients that may include financial planning, wealth management, tax planning and estate planning. We also deal with financial products and are sub-brokers of BSE and NSE. We have a totally transparent process of dealing with clients. We disclose all relevant information, including the commissions that we may receive and conflicts of interest, to all our clients regularly. Our financial planning process adheres to the standards of Financial Planning Standards Board India.
Procyon`s mission is to bring the benefits of financial planning process to the investors.
How and why did you decide to become so involved with personal financial planning and retirement planning?
First, it was my personal need to learn more about doing things better that led me to explore CFP education. Once I realized that I also like helping others to make financial decisions, I quit my job and started the practice. About retirement planning, it was the lack of awareness and planning amongst the people that drove me to explore more. Even today people mistake buying a few products as planning for retirement. The effects of taxation, inflation and longevity are largely ignored. Finally they have to compromise their lifestyle during the retirement.
The competition in wealth management has been intense, with a number of small players having plucked in recent years. How do you place yourselves in that league?
We do not compete against wealth managers. For us, biggest competition is lack of awareness about financial planning amongst investors. We would like to clearly differentiate the value addition of financial planning process as compared to wealth management. We find that many young earners need financial planning services more than wealth management. Wealth management pre-supposes existence of wealth in whatever size it may be, whereas financial planning would tell them how to accumulate wealth. These young earners otherwise may fail to adhere to disciplined way of investing which is how anyone can create wealth. Strangely, simple things are rather ignored mostly.
What is the one financial mistake nearly everyone makes?
Not starting early. Most of the investors fail to understand the relationship between starting early and power of compounding on one hand and starting early and taking advantage of market cycles on the other.
What are your thoughts on the current financial crisis, specifically as it pertains to retirees and those approaching retirement?
It will be a big blow to those approaching retirement because they would have lost substantially if they had not transitioned to safer assets when they near the retirement. All financial advisors should make it a point to advise their clients to exit out of volatile investments in good time much ahead of actual retirement. We do that without fail.
From your perspective, what are the most pressing risks facing retirees in the current environment?
Undoubtedly it is inflation. It will be very painful for retirees to constantly lose purchasing power when they do not have ability to replace the loss in any way.
Are there any retirement savings guidance programs or books you would recommend to help an individual identify just how much they should save each month?
Unfortunately, for an Indian investor or retiree, I did not find many good books. Books written by foreign authors may not be that relevant for Indian context, though principles would remain same. I would also like to caution the investors against inappropriate advises given in many popular publications and blogs which only create myths and thumb rules. No professional should talk about thumb rules at any point of time.
What is the most unbelievable excuse you`ve heard about why an individual cannot save for retirement and what was, or would be, your response to it?
Excuse: No surplus for retirement planning because of home loan EMIs on my 3rd home!
Response: When you retire, you will be asset-rich but cash-poor.
Any additional thoughts, comments you would like to address?
Financial planning is a necessity today. Financial products are only means to an end and not an end themselves. Too much dependency on products that too, tied-in for a very long period makes the investors lose in an increasingly volatile financial environment. Investors who ignore planning but focus too much on products may pay a heavy price later.