Last Updated on April 10, 2026 by Hemant Beniwal
“The greatest enemy of a good plan is the dream of a perfect plan.” – Carl von Clausewitz
What do you think is the biggest threat to your financial plan?
A market crash? A job loss? Bad advice from your cousin’s friend who “dabbles in stocks”? All of those can hurt. But in 25 years of managing money for Indian families, the single biggest destroyer of financial plans isn’t an external event. It’s your own behaviour.
Not your intelligence. Not your income. Not even your knowledge of finance. Your behaviour. The decisions you make when you’re scared, greedy, bored, or just too busy to pay attention.
Financial planning involves many things: your money, your goals, your personality, and your habits. It’s a decades-long activity. And while we can control some variables, we often underestimate the five silent killers that derail even well-made plans.
⚡ Quick Answer
The biggest problem with most financial plans isn’t the investments chosen or the returns earned. It’s investor behaviour: emotional decisions, herd mentality, and the inability to stick to a plan when markets get volatile. A fee-only financial advisor’s most important job isn’t picking funds. It’s stopping you from sabotaging your own plan.
The 5 Things That Actually Derail Financial Plans
Before we talk about behaviour, let’s acknowledge the usual suspects. Most financial plans run into trouble because of one or more of these:
- ▶Unexpected loss of income (job loss, business downturn, health emergency)
- ▶Mismanagement of income and expenses (lifestyle inflation, no budget discipline)
- ▶Unexpected financial burden (parent’s health costs, child’s education abroad)
- ▶Underperformance of investments (wrong product selection, poor timing)
- ▶Our own behaviour (fear, greed, overconfidence, avoidance)
The first four are somewhat outside your control. The fifth one? That’s entirely on you. And it’s the one that causes the most damage.
◆
Your Behaviour Is the Biggest Problem With Your Financial Planning
Social, cognitive, and emotional factors play a powerful role in financial decisions. Sometimes, they make you act against your own financial interests without you even realising it.
Let me give you three real examples I’ve seen in my practice:
Manas (name changed), a 38-year-old product manager in Hyderabad, bought a stock because all his colleagues were buying it. The stock had already appreciated 60% in two months. He bought at the peak. Six months later, it was down 35% and he was still holding, hoping for a recovery. Classic herd mentality followed by loss aversion.
Shilpa (name changed), a 45-year-old doctor in Delhi, invested 100% of her savings in bank FDs. She was scared of every other asset class. She had ₹1.2 crore in FDs earning 6.5%. After inflation and 30% tax bracket, her real return was actually negative. Her “safe” choice was silently destroying her retirement corpus.
Riya (name changed), a 50-year-old HR director in Mumbai, invested in random tax-saving products in the last week of March every year. No strategy, no asset allocation, just whatever the agent pushed. She had 7 ELSS funds, 4 insurance policies sold as investments, and an NPS account she’d forgotten about. Her portfolio was a junkyard of impulse decisions.
Must Read – Behavioural Finance: How Your Mind Sabotages Your Money Decisions
Recognise yourself in Manas, Shilpa, or Riya?
A financial plan built around your behaviour changes everything.
What Nobody Tells You About Financial Planning Problems
Here’s something most financial articles won’t say: even your financial advisor can be behavioural biased.
A 2022 study published in the Journal of Business Research found that financial planners, despite training and experience, are not immune to cognitive biases. Overconfident advisors tend to recommend concentrated portfolios. Loss-averse advisors tend to be overly conservative, even when clients have a 20-year horizon.
This is why the fee-only model matters. When an advisor earns commissions from product sales, their bias is baked into the revenue model. When they earn a flat fee regardless of what you buy, the incentive to sell you the wrong product disappears. The best financial advisor isn’t the one with the best stock picks. It’s the one who manages their own biases as well as yours.
✅ Tip
When evaluating a financial advisor, don’t just ask about their returns. Ask them: “What was the worst advice you ever gave, and what did you learn from it?” An honest answer tells you more than any credential.
How a Financial Advisor Actually Fixes This
Most people think financial advisors just pick mutual funds. That’s like saying a doctor just writes prescriptions. The real value of a good financial planner goes far beyond product selection:
They get your finances in order. Portfolio consolidation, nominations, joint holders, documentation, will preparation. The boring but critical stuff most people keep postponing until it’s too late.
They plan your taxes proactively. Not in the last week of March. In April itself, for the entire year ahead. The difference between reactive and proactive tax planning can easily be ₹50,000-₹1,00,000 per year for senior executives.
They set goals without emotional bias. You might want a ₹5 crore house because your friend just bought one. A good planner will show you whether that goal aligns with your actual financial capacity or whether it will destroy your retirement.
They sell underperforming assets without attachment. You won’t sell that stock your father recommended because it feels disrespectful. Your advisor has no such emotional baggage. He sees a number, not a memory.
They review your finances when you won’t. When you’re busy or stressed, finances take a backseat. Your planner keeps reviewing, rebalancing, and course-correcting even when you’re not paying attention.
They balance your emotions. When markets crash 30% and your portfolio shows a ₹15 lakh notional loss, your advisor is the person who stops you from pressing the panic button. This single intervention, done even once in your investing lifetime, can save you more than the advisor’s entire fee.
Must Read – 6 Steps of Financial Planning Process
Financial planning is not an event. It’s a relationship.
The right advisor doesn’t just manage your money. They manage the most unpredictable variable in your portfolio: you.
Frequently Asked Questions
What is the biggest problem with financial planning in India?
The biggest problem is investor behaviour, not investment selection. Emotional decisions like panic selling during crashes, chasing last year’s best performers, or investing in random products to save tax in March cause more financial damage than any market event. A structured plan with a disciplined review process fixes most of these problems.
How does behaviour affect my financial plan?
Behavioural biases like loss aversion (holding losers too long), herd mentality (buying because everyone else is), and overconfidence (believing you can time the market) lead to poor decisions that compound over years. Even highly educated investors fall prey to these biases because they’re emotional, not logical, responses.
Do I really need a financial advisor?
If you can honestly say you didn’t panic during the March 2020 crash, you review your portfolio quarterly, you have a written financial plan, and you never buy financial products based on someone’s tip, then maybe you don’t. For everyone else, a fee-only financial advisor acts as a behavioural coach who prevents your worst impulses from destroying your plan.
How do I choose the right financial planner?
Look for a SEBI-registered investment advisor (RIA) who charges a fee, not commissions. Ask about their process, not their returns. A good planner follows a structured 6-step process: establishing the relationship, gathering data, analysing your finances, developing a plan, implementing it, and reviewing it regularly. If they skip straight to product recommendations, walk away.
Your financial plan doesn’t need to be perfect. It needs to survive contact with your emotions. That’s the real test.
Do the Right Thing and Sit Tight.
💬 Your Turn
What’s the biggest mistake you’ve made with your financial plan? Not the market that went down, but a decision you made that you now regret. Share in the comments.
Managing your investments and expenses is a vital part of financial planning. Unfortunately, every investor only thinks about instant profits from investments because they do not want to risk their income. We should instead be patient and focus on getting regular profits from our long term and diverse investments.
Hi Alia,
Thanks for sharing your views.
Managing your investments and expenses is a vital part of financial planning. Unfortunately, every investor only thinks about instant profits from investments because they do not want to risk their income. We should instead be patient and focus on getting regular profits from our long term and diverse investments.
Nice article.Provides valuable information
I enjoyed reading your article. Please make more interesting topics like this on.
I’ll come back for more 🙂
Thank you for sharing this post. It was very useful. Keep posting !!!
This blog post showed very good understanding and it was well-thought out work. I’m obsessed with reading any article for help I can find. Thank you for sharing.
to the Hemant Beniwal, this blog is very amazing and its all about how to fixing financial planning. the money, efforts and goals are key that helps in fixing financial planning. i read your blog and this blog will definitely help me in future. thank you!
Especially in finance & banking, one should never be over-confident about their knowledge. It is always advised to seek help and consultancy from an expert, not to make good but better decisions.
This blog is very nice The Biggest Problem With Your Financial Planning, And How You Can Fix It and Financial Planning, financial advisor, equity mutual funds, Financial Planning Thumb Rules, The Art of Thinking Clearly, thanks for this information thanks for sharing us…
This is a brilliant post. You have explained it in a most simpler way that anyone could understand the concept of behavioural biases. Thanks for sharing. I found this article really helpful.
I found your blog by chance. It’s amazing great effort. Thank you so much.
wow nice post thanks 4 sharing Amzaing blog
Hi Hemant,
Thank you for sharing this informative article. I learned new things from you. It helped me a lot and I hope that it will also help others. I appreciate your efforts.
Have a good day ahead.
Nice, it’s an amazing well-written post.