Sathya Rao lived the idyllic life sailing around the world with her merchant navy officer husband Ganeshyam and their two children. Once they were ready for school though, she chose to settle down in Chennai and pursue her career as a lawyer. The responsibility of managing the family money fell on her since Ganeshyam was away for long periods of time while on duty. Even after he left the merchant navy after 35 years and started a career on land, Rao continued to manage the family’s finances. “His argument was that I had managed everything well all along and he saw no reason to worry at all," said Rao.
However, a project to construct an apartment complex on her ancestral property in Chennai made Rao realize that managing finances was more complicated than she thought. She had embarked on the apartment project believing arranging the amount the builder had estimated was enough. Midway she found herself running short of money and on the verge of having to take a loan. It was then that she decided that it was time she took professional help for her money. A friend put her in touch with Renu Maheshwari, chief executive officer and principal advisor at Finzscholarz Wealth Managers LLP. “I knew Renu socially. Our children went to the same school. When I wanted help with my finances, I reached out to her and she has been managing my finances ever since," said Rao.
The family was used to a comfortable lifestyle and with a considerable inherited real estate portfolio, Rao had never really been concerned about being short of money. Whatever savings they had were in fixed deposits. When she did think that their savings should be invested better for growth, she got sucked into a whole lot of ill-advised unit-linked insurance plans (Ulips) and other insurance products. This meant that when she needed funds to get her apartment project completed, she found that all her money was stuck.
“It was a wake-up call," said Rao. “None of those people who pushed the product to me were there to help when I needed help to get my money back," she added.
Rao gave her financial adviser a carte blanche to set things right. The first step that Maheshwari took was to consolidate all the products that Rao had accumulated over a period of time and help her exit from the ones that had no relevance to her needs or goals.
“My first priority was to help Sathya get her apartment completed. All the funds we realized were held in liquid funds for almost a year and a half to manage the cash flows till the project was over and we managed to do it without a loan," said Maheshwari.
The other goals that Rao had was the marriage of her daughter Sagarika and higher education of her son Anirudha who was training to be a chef in Sydney, Australia. Based on a detailed risk and psychological profiling, the financial assets of the family were allocated between equity and debt mutual funds and some bank deposits.
“Sathya gets jittery if there is a possibility of loss of capital and we have made sure that has not happened," said Maheshwari, touching upon her client’s fears. Rao has been comfortably meeting her goals. “I told Renu in 2017 that I intend to get my daughter married in 2018. She managed my investments in a way that all the money I needed was available when I needed it last year," said Rao.
This year too, the portfolio has been rebalanced to have greater exposure to debt as funding for Anirudha’s education is round the corner.
Retirement is the last goal that Rao has on her list and she is confident that Maheshwari will manage that too as she has done with the other goals. “I have a property that I will sell if required and hand the money over to Renu to invest for our retirement," said Rao. They meet at least once every six months to review the goals and portfolio. Rao’s confidence in Maheshwari is evident from the fact that she has now asked her to advise her daughter too. “I have asked her to be strict with Sagarika and make her start early so that she does not make the mistakes I made," said Rao.
Mistakes I won't repeat
1. Won’t save in products that don’t let savings grow
2. Won’t take too much exposure to real estate since it is difficult to manage