You have to fix a date by which you would want to achieve the goal along with the money value of your financial goal. In case the time available on hand changes, your financial plan may fall short of success. For example, an individual has decided to accumulate . 15 lakh for his daughter's higher education, and he assumed that he will pay . 5 lakh per year for three years. But what if she enrolls for 18 months course overseas, where her father has to pay . 15 lakh at the start of the course. Such a development is beyond one's control and one can do very little about it at the last moment. One probably has to use funds meant for some other objective to pay for the course. Even if you get your goals right, there are issues with implementation of financial plan.

Implementation Blues

Some individuals think they can do implementation themselves at cheaper cost. But it may not be that simple. "Financial planners may recommend cheaper products. But distributors may not sell it at all given the low or no commission. A financial planner may recommend liquid funds to maintain emergency corpus. But not all distributors are keen to offer a liquid fund as they are not remunerative. Some individuals lack discipline to meticulously implement the plan given to them. Procedural issues related to KYC, account opening and starting SIPs also adds to woes. "We come across situations where for months there is no progress on implementation of the financial plan, making a well drafted financial plan useless.

Even if the individual is keen to implement the plan, some decisions at the implementation level may change the performance of the plan. Let us understand with an example. An individual estimated that he would require Rs 15 lakh for his daughter's wedding. This included 100 gram of gold. When preparing the financial plan in CY2006, gold prices were at around . 8,000 per 10 gram and he had 15 years in hand to save the money. But now, five years down the line, gold prices have shot up at a much higher rate than average inflation to around . 28,000 per 10 gram. It resulted into wedding expense estimate going much above the . 15 lakh mark. In 2006, there was no gold ETF around. Had he started buying units of gold ETF at regular intervals after it was launched in CY2007, the gap between the estimate and the actual would have been less. One can segregate wedding expenses under two heads – cost of gold and actual wedding cost. Gold ETFs can be used to accumulate gold; and financial instruments can be used to accumulate funds required for other wedding expenses. Not all individuals are aware of such techniques and may face difficulty in implementing the financial plan. Even if you implement the plan you have to keep visiting it at regular intervals.

Failure To Review

Buy-and-forget is the biggest risk. You have to review your plan at regular intervals to ensure that you are on track. A review will bring forth any deviation from the expected progress.

Reviews help you account for changes in priorities, changes in tax structure and performance of the existing products in portfolio. It also helps you validate your assumptions pertaining to inflation and expected returns from portfolio. Some of the problem situations discussed above, could have been dealt better through thorough reviews at regular intervals. One review a year is a must.