A new innovation has arrived in the Indian Mutual Fund Industry – Franklin Templeton Family Solutions. Some time I tell people that “mutual funds are not investments but investment tool/vehicle to achieve once goals.” And now Franklin Templeton Family Solutions plan fits better in this definition.
Let’s understand it in detail – Franklin Templeton Family Solutions features, benefits, process, and limitations. Also check the plan that I have created from it & compared it with my solution. You can also download the Family Solutions Planner (software) from end of this post.
What is Franklin Templeton Family Solution?
New age thinking is – when people buy something they don’t buy a product or service but they buy a solution. And when you seek a solution means you are looking at a problem which is already there or may be visible in future. So when you buy mutual fund or any other investment for that matter you are actually looking to achieve your financial goals. So Franklin Templeton Mutual Fund has taken a clue from this need of every investor and designed Franklin Templeton Family Solutions. Family solutions can help you to plan for your retirement, child’s future & other accumulation goal like buying a dream house of a foreign trip.
Process of investing through Franklin Templeton Family Solutions
- With help of your financial/mutual fund advisor create a goal plan through Family Solutions Planner (software).
- Based on the solution fill a specially designed form; attach your goal sheet & a single cheque.
- Franklin Templeton mutual funds will register your goals in their system & will create a special account. Will send you a welcome letter & customized statement.
- Periodically review your progress with online account of your advisor.
Benefits of investing through Franklin Templeton Family Solutions
- Through Family Solution Software you can build your customized goal plan.
- You can invest in Franklin Templeton Mutual Fund trough single form & single cheque.
- You can monitor your plan through customized statements & your advisor.
- You can design the plan but there is no compulsion that you should invest the whole amount or only in suggested funds.
- Biggest benefit what I feel is when you link your investments to goals you stay longer in that particular investment solution. You are away from the sometime erupting greed during good market phase or temptation to do an impulse purchase. And this avoids unnecessary churning & keep you focused on your goals. That’s the reason people who invest according to financial plan have higher probability of achieving their goals.
First let’s check a plan that I have prepared using this software & then check few big limitations of Franklin Templeton Family Solutions.
Franklin Templeton Family Solution Plan
Try to understand plan which is self explanatory. I have assumed simple figures so that you can easily understand the plan & calculation.
Franklin Templeton Family Solutions Limitations
- It doesn’t consider growth in savings but actually when you will earn more you can save more. So if you are in private job you can expect 8-12% growth in your salary & you can also increase your saving by 4-6% every year. If we will consider saving growth your starting monthly saving figures will be substantially low.
- It doesn’t consider that when I will achieve my 1st goal – I can divert my fixed saving to other goals. For ex in above goal I would like to buy a car in 8 years & I need to save Rs 9483/month for that. But what will happen to this saving once I buy car. Either I will reduce my saving or divert it to some other goal. So figures shown by Franklin Templeton Family Solutions not look practical.
- You have to fill single form & cheque but minimum investment amount for fresh and additional purchase in each scheme shall be as specified in the respective scheme.
- Biggest problem is Franklin Templeton Family Solution or any other such solution will talk about investing in single mutual fund company. But very basic rule of mutual fund portfolio construction says that you should not invest in more than 1 fund in single fund house. This is same as sticking with an insurance company in case of ULIP.
My Solution after removing first 2 limitations
If you have checked the plan constructed through Franklin Templeton Family Solutions it shows that I should save Rs 35000 per month to achieve all my goals. But I tried some different calculations – according to that I can start with monthly saving of Rs 22000 – assuming 5% increase in savings every year.
Emotional side of Franklin Templeton Family Solution
We all know goal based or emotional based sales are successful in Insurance. Is Templeton MF doing something good or it is just another emotional way to sell.
Livemint newspaper quoted “Lifestage (plans) has to come. You have to touch emotional chord of people. That is how they will invest,” said an industry official, who also holds office at the Association of Mutual Funds in India, the industry lobby. He declined to be named.
Clearly hinting if this goes through well others will line up with their solutions. Anyway time will tell the real picture.
Download Franklin Templeton Family Solutions Planner (software)
Removed after getting message on bugs.
Share your views on Franklin Templeton Family Solution and what else you would like to see in such solutions.