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WF: While the industry focuses on ELSS this tax season as always, UTI seems to have come up with a differentiated strategy of an umbrella of solutions called the UTI Smart Plan catering to diverse risk appetites and goals. Can you please take us through the options and suitability of each one?
Suraj: The three products which are grouped together under the umbrella of UTI Smart Plan have differing objectives- UTI Long Term Advantage Fund Series V aspires to create wealth, UTI ULIP integrates asset allocation with insurance decisions and UTI Retirement Benefit Pension Fund helps you in planning for retirement needs. The tax benefits under Section 80C for all the three products provide a dash of homogeneity and binds the products from the perception of an investor. When you invest in any tax planning instrument, the asset class to which it belongs, the proportion of the said asset class in your portfolio and your risk-return profile has to be kept in mind, in addition to tax savings. Tax savings act as a kicker or accelerator to reach your financial destination. UTI Smart Plan brings to the table under one umbrella options to save tax by investing across different asset classes harmonizing tax planning with asset allocation.
WF: How does your UTI ULIP stack up against ULIPs of insurance companies? For a fund distributor, what would you recommend as the key talking points to highlight why UTI ULIP?
Suraj: Normally, the two important financial decisions viz demand for life insurance and the optimal asset allocation have consistently been analyzed separately. How much one should insure is seldom framed in terms of riskiness of one's human capital resulting ,perhaps in over-insurance or under-insurance. UTI ULIP integrates investment decision with life insurance decision. UTI ULIP has a track record of 45 years and has an excellent track record in providing stable returns with an hybrid portfolio coupled with insurance cover at low rates. The expenses etc are in line with other schemes of mutual funds.
WF: How does the UTI Retirement Benefit Pension Fund stack up against annuities of life insurance companies? What would you recommend as the key talking points in favour of this solution, vs annuities and bank deposits, which are the two favoured sources for retirement income?
Suraj: UTI RBP is a notified pension scheme with an asset allocation of equity and debt, a maximum limit of 40% in equities. Upto the retirement age, the investment grows to create a nest egg and the Systematic Withdrawal Plan ensures a steady cash flow post retirement ensuring that "through the retirement " is as much important as "to the retirement". Annutiies from insurance plans are fully taxable while Systematic Withdrawal Plan withdrawals are more tax efficient. The upside of returns is very much present in UTI RBP which is not the case with annuities of insurance plans.
WF: Given the decline in bank deposit rates, is there a case for distributors to aggressively pitch your RBPF to senior citizens? How do you plan to tap into the huge opportunity presented by falling bank deposit rates?
Suraj: We provide a bouquet of three products to investors under UTI Smart Plan. The distributors can act as "choice architects" to help investors choose either one or all the three products to perfectly synchronize the needs of investor with their risk tolerance. Investment , finally like life, is the sum of all your choices. We plan to reach out to our channel partners through an integrated promotion program.
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