This article was published in The Week on 21 Feb 2016
Gone are the days when people retired at the age of 60. Today, 40 is the new 60 when it comes to retirement. And, therefore, planning early for it becomes essential. But you no longer need to break your head over it; a retirement coach or adviser will do that for you. Retirement coaches will help you attain your financial goals, and thereby financial freedom.
Meet Rajiv Jamkhedkar, whose firm’s Azad programme does just that. An engineer by training, Jamkhedkar worked for 23 years in the banking and life insurance industry and retired at the age of 42. One fine day in 2013, he sat down at the dining table with his wife and wrote down his business plan. Next year, he started Serengeti Ventures Pvt Ltd with Rs.30 lakh—his own savings.
Jamkhedkar had his adviser in Chaitali Dutta, who earlier worked with the State Bank of India and the Reserve Bank of India. She is now his partner at the firm and its chief operating officer.
Today, the company sees decent turnovers and guides more than a hundred people to plan their early retirement. With two branches, in Gurgaon and in Mumbai, the Azad programme has about 25 certified financial planners, who chart out your life needs and expected goals. The advisers then build separate kitties to meet goals like parents’ health care, child’s education, becoming debt free or owning your own house. “People need the right adviser,” says Jamkhedkar. “I feel with right advice everyone can achieve financial freedom. It is possible.”
Corporates, too, are now directing their employees to the Azad programme. The company recently did a survey among 150 corporate executives in the two cities. The result was startling. Almost 90 per cent respondents felt they were far from being financially free, and an equal percentage of people were worried about money all the time. ‘How will I pay my EMI if I do not have a job?’ was among the top worries. “The absence of a social security system, like in the US or other developed countries, have left the young most vulnerable,” says Jamkhedkar. “What if I lose my job tomorrow? What if an earthquake occurs? Worries like these could be overcome with sound financial planning at an early age.”
Based on his experience in retail financial services, Jamkhedkar says: “Your insurance agent makes a 30 per cent commission over your annual premium. Our intention was to cut out the middlemen and with a fraction of that money to cover most of your risks.” The Azad programme, therefore, does not work on the commission model. Instead, it charges Rs.36,000 to Rs.42,000 for a year of coaching, akin to what you will spend on a personal trainer at a gym.
One can enrol for the seven-stage programme through azadonline.com. The site also gives free advice on enquiry. The programme’s enrollment form includes questions like: Who advises you for money? Do they have your interest at heart? How comprehensive and rigorous are they? The next set of questions test how organised you are with respect to investments, expenses and other monetary decisions. Risky habits like dependance on the partner’s earnings and compulsive spending are also tracked from last year’s bank records. Take, for instance, Keyur, a young executive at a multinational engineering firm. “I was surprised the first time I was told that I had spent Rs.14 lakh on my credit cards,” he says. “I immediately realised that something needed to be done.” He has since then bid goodbye to all his credit cards.
Based on the answers to the questionnaire, a detailed financial or retirement plan—usually a set of documents crammed with numbers in columns—is given. The company has also developed an app, through which improvements on their financial position could be monitored. The entire financial plan is also available on the app. The dashboard of the app shows users as to what extent they have been able to reduce their financial risks, and it enables them to get a clear picture of what they could do next. Processes could also be reviewed and corrected using this app. The app also sends out reminders for your monthly, quarterly or annual investment commitments and reviews them for you at the push of a button.
According to Jamkhedkar, at least three years of association with the programme is required for results. “We start with working on reducing debts of our clients,” he says. “We help them get rid of investment they do not need and then focus on the goals for their life. It terminates with a goal of building a retirement net worth that will sustain you for the remaining 20-25 years of your life.”
But no matter how much you plan, life throws a surprise party once in a while. And, you need to be prepared for those as well. “During the seven-stage programme, you start with covering risks, and towards the end you get to start on your discretionary goals,” says Jamkhedkar.
Rajat, a general manager in a large multinational firm, knows what Jamkhedkar is talking about. Recently, his company went through a series of layoffs. “After joining the programme, I repaid some of my house loan, as paying EMIs in the event of a job loss was a constant worry,” he says. Now, he wants to quit his corporate job and explore a career in cartooning—his first love. “I am getting enough publishers for my cartoons and am making a decent amount from it. I am just waiting for the right time to do it full time,” he says.
Varsha, a divorcee who lives in Delhi with her son, too, has a discretionary goal—to start her own art studio and gallery. An advertising professional, she has been with the programme for a year now. “I already feel confident that I can give a decent college education to my child,” she says.
Chaitali Dutta says keeping the interest of their clients in mind is what makes the programme successful. “Most people doing the programme will attain an early retirement and become financially free in lesser time.” she says. But Jamkhedkar has a word of caution: “We are not wealth managers, and we offer no guarantee on returns. Clients should be motivated to achieve and not have unrealistic goals. Last but not the least, he or she must not be very old to join the early retirement programme.”
Likewise, Madhu Rai Garg, along with her husband, Qimat, and son Amber, ran a chartered account and a tax consultancy firm in East Delhi. But when she saw a surge of young people, mostly couples, coming to her for planning financial goals, she decided adapt to the needs of the e-generation. With her motherly approach and a self-devised formula, she now helps her young clients calculate how long their money will last. The simple Excel sheet programme takes into account details like a person’s age, income, liabilities and returns from current investment.
“When I learnt that my current investment will run out at 45 years of age, I started thinking seriously about financial goals,” says Shantanu, 37, an MNC executive and father of a two-year-old son.
It took a close friend’s death for Rakesh, 32, to start planning and working towards his financial goals. A year before his friend’s death, Rakesh had spoken to Madhu after trying out her financial goal formula on the firm’s webpage. “I had not executed anything but kept a printout of the advice,” he says. Over the course of the week following his friend’s death, he sought Madhu’s structured planning to meet his life goals. After the formula does its bit, Madhu and her team take over—from restructuring debts and investments to sowing the seeds for future financial goals. Says Madhu: “We want people to be aware of the benefits of their wise financial decisions today and live a stress-free life.”