Monitoring and review — CFP IFP

Monitoring and review keep plans current. CFP-FPSB framework: annual comprehensive + life-event triggered reviews. Static plans become outdated; dynamic plans serve clients well.

Foundation

Review schedule: Monthly: • Portfolio statement to client (automatic) • No CFP intervention typically Quarterly: • Performance vs targets • Allocation drift check • Recent recommendation status • 30-60 minute call Annual (comprehensive): • Plan revision • Goal-progress assessment • Risk-profile re-evaluation • Tax planning for upcoming year • Insurance review • Will and estate document review • 90-120 minute meeting Life-event triggered: • Job change, marriage, divorce • Child birth, child adulthood • Major asset acquisition (home, business) • Inheritance • Health diagnosis • Retirement transition

Deep Dive

Annual review checklist: 1. Goal status: still relevant? Amounts updated for inflation? 2. Cash flow: changed? Income up/down? 3. Net worth: updated balance sheet 4. Investment performance: vs benchmark, vs targets 5. Risk profile: questionnaire + behavioural observation 6. Insurance: still adequate? Any gaps? 7. Tax: optimisation for new year 8. Estate: will current? Nominees updated? Quarterly check-in (lighter): 1. Portfolio drift from target allocation? 2. Recommended actions implemented? 3. Any concerns from client? 4. Update on upcoming life events? Review documentation: • Meeting notes • Status of each recommendation • Changes to IPS • Action items from meeting • Follow-up scheduled

Worked example

Worked example — Mrs. Goyal's annual review Mrs. Goyal, year 2 of CFP relationship. Review agenda (90-minute meeting): 1. Performance review (15 min): • Portfolio: ₹65L grew to ₹76L (+17% — beat NIFTY 100's 14%) • SIPs continued; on track for retirement target 2. Goal status (15 min): • Retirement: trajectory on target • Education for older child (age 16): need to ramp up next 2 years (₹15L gap) • House upgrade: timeline pushed by 18 months 3. Insurance review (10 min): • Term insurance: adequate • Health insurance: claim experience this year (small) • PA cover: still active • Recommendation: maintain 4. Tax review (15 min): • Current year: optimised; no changes • Next year planning: incremental ELSS allocation • Loss harvesting: ₹50K STCL to crystallise 5. Estate review (10 min): • Will: still current; one minor update needed (new property) • Nominees: all current 6. Life events update (10 min): • Father-in-law passed away; family inheritance ₹35 lakh expected • Need to integrate with existing portfolio • Update will 7. Plan updates (15 min): • Increase SIP for older child's education by ₹15K/month • Plan for inheritance integration • Continue current allocation Decisions made: • Increase SIP • Plan inheritance allocation • Update will (post-inheritance) • Continue strategy Next review: 6 months from now (post-inheritance integration). Follow-up: meeting notes + action items emailed within 48 hours. Implementation log updated. Mrs. Goyal's plan stays current.

Real-world scenario

Real-world scenario — Mr. Thakur's 5-year journey Year 1: • Initial plan delivered, ₹45L net worth, family of 4, retirement goal • Comprehensive recommendations implemented over 6 months Year 2: • Annual review: portfolio +14%, on track • Father had stroke; increased monthly contribution to help with parents' care • Insurance review reveals gaps; upgraded Year 3: • Job change: salary increased 25% • Tax restructuring; old vs new regime • Increased SIPs significantly Year 4: • Daughter started college; education fund deployed • Inheritance from grandmother (₹25L) integrated • Will updated to reflect changes • Mid-life crisis question about career change Year 5: • Career change executed; income initially lower • Plan adjusted: temporary higher liquidity, lower SIPs • 2-year transition supported financially • Inheritance helped buffer Throughout: annual reviews + quarterly calls + life-event responses. Result: net worth grew from ₹45L to ₹2.1 cr over 5 years. Family stable through transitions. Mr. Thakur's plan flexible and responsive. This is what 5-year CFP relationship looks like in practice. Static plans don't survive; dynamic ones flourish.

Advanced

Practitioner discipline: • Schedule reviews proactively (don't wait for client to call) • Pre-meeting prep: review portfolio, prepare agenda • In-meeting: focused on what's important, not just status report • Post-meeting: follow-up email + implementation tracking Life-event responses: Job change: • Tax implications (severance, new salary) • Insurance (employer benefits) • Pension/EPF (transfer) Marriage: • Joint financial planning • Insurance (spouse coverage) • Will updates (new beneficiary) • Tax (joint vs separate filings — N/A in India unless joint) Divorce: • Asset division • Will update • Insurance beneficiaries • Tax implications (alimony, property) Child birth: • Education planning starts • Insurance (term, health for child) • Will updates (new beneficiary) • Investment for child Inheritance: • Tax implications (typically not income, but capital gains on appreciation) • Asset integration with existing portfolio • Estate plan revision • Charitable giving consideration Health diagnosis: • Insurance evaluation • Investment timeline reconsidered • Estate planning urgency • Living will considerations

Regulatory references

SEBI IA Regulations on review
CFP-FPSB Module 5 syllabus
Best practices on advisory

Common mistakes & pitfalls

Static plans (no annual review).
Reviews skip critical sections.
No life-event-triggered updates.
Documentation gaps.
Lack of follow-up post-review.

Frequently asked

How often should portfolios be rebalanced?

Quarterly check; rebalance if drift exceeds 5% from target. Annual: thorough review and rebalancing. Avoid frequent rebalancing (transaction costs, tax events).

What if client's risk profile changes?

Acknowledge in review. Discuss reasons. Update IPS and allocation accordingly. Document reasoning. Don't fight client's revealed preference; adapt the plan.

How to handle major life events?

Off-cycle review. Within 30 days of event. Comprehensive plan revision (or specific component update). Document decisions and updates. Re-engagement with revised IPS.

Practice questions

Click each question to reveal the answer and explanation.

Q 1

Annual comprehensive review:

(a)Optional
(b)Standard practice; covers all six domains; updates plan and IPS
(c)For HNW only
(d)Quarterly is enough

Correct: (b) Standard practice; covers all six domains; updates plan and IPS

Annual comprehensive review: standard CFP practice. Covers all six domains. Updates plan, IPS, recommendations. 90-120 minute meeting.

Q 2

Quarterly review covers:

(a)Same as annual
(b)Performance vs targets, allocation drift, recent action status; 30-60 min
(c)Just monthly portfolio
(d)Just tax

Correct: (b) Performance vs targets, allocation drift, recent action status; 30-60 min

Quarterly review: lighter than annual. Performance, drift, action status. 30-60 minutes typically. Build relationship, identify issues early.

Q 3

Life-event triggered review:

(a)Wait for next annual
(b)Off-cycle review within 30 days of event
(c)Once per decade
(d)Optional

Correct: (b) Off-cycle review within 30 days of event

Major life events trigger immediate review. Within 30 days: address insurance, will, allocation, plan as needed. Don't wait for annual cycle.

Q 4

Portfolio rebalancing trigger:

(a)Annual only
(b)Quarterly check + rebalance if drift >5% from target
(c)Monthly
(d)Daily

Correct: (b) Quarterly check + rebalance if drift >5% from target

Rebalancing: quarterly check; rebalance if drift exceeds 5% from target. Annual: thorough rebalancing. Frequent rebalancing creates costs.

Q 5

Documentation of reviews:

(a)Optional
(b)Required: meeting notes, action items, IPS updates, follow-up tracking
(c)Verbal only
(d)Email only

Correct: (b) Required: meeting notes, action items, IPS updates, follow-up tracking

Comprehensive review documentation: meeting notes, action items, IPS updates, follow-up tracking. Mandatory for SEBI-RIA; best practice for all CFPs.

Educational purposes only. The numbers, returns, and examples used in this lesson are illustrative. Past performance does not guarantee future results. Mutual fund and securities investments are subject to market risks. This lesson is not investment advice; for advice tailored to your circumstances, consult a SEBI-registered Investment Adviser. Read our full disclaimer.