The Hindu Business Line : Financial planners to redraw strategy

Financial planners are preparing to single out key provisions of the Budget with a view to leading clients towards more efficient asset allocation and de-risked portfolios.

The financial planning community intends to capitalise on the budgetary announcements, which have among other things broadbased Section 80C exemptions and further liberalised investment norms for fund managers. Both will help convert a higher portion of household income into longer-term savings, it is felt.

These provisions will enable investors to plan better and optimise their asset allocation strategy, financial planners indicate, while alluding to what they say are two of the more important adjustments - inclusion of 5-year-plus bank FDs in Section 80C exemptions and increase in pension fund investment limit under Section 80CCC to Rs 1 lakh.

The Budget comes as a relief of sorts for small investors, feels Bajaj Capital, which is rooting for better financial planning practices in India.

"While personal tax rates have not changed, the FM's statements should bode well for those who are taking to equity investing," Mr Rajiv Bajaj, Managing Director, said.

The Budget, Financial Planning Standards Board India (FPSB) has noted, will enhance the asset diversification need of investors. It will in a way also throw light on the need for professional advisory models for financial products like life insurance and mutual funds.

"The comprehensive Bill on insurance reforms signals the Government's intention to further liberalise the market, making it possible for a larger section of the population to enjoy the benefits," feels Mr Ranjeet Mudholkar, CEO of FPSB India.

Provides fillip

The planning fraternity hopes to gain from the economic prosperity riding on infrastructure development programmes, the Government's continued support to insurance and pensions, and a further opening up of the international investment regime for local MFs.

FPSB India is of the view that the Government intends to stimulate growth on the debt front as well. The reference here is to increase in FII investment limits in G-secs and corporate bonds as well as to the specific role debt allocations are likely to play in the portfolios of the average domestic investor.

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