Suitability and proposals: matching a goal to a plan without promising returns
How to turn "I want ₹10 lakh in seven years" into a plan that is honest about what is unknown.
Clients do not come to you for a scheme. They come with a goal, a worry, or a vague feeling that they should be doing something. Your job is to turn that into a plan they can follow, and to do it without pretending to know what the market will return. Suitability is both the regulation and the craft.
Start with the goal, not the product
Ask three questions before you mention a single fund. What is the money for? When is it needed? What happens if it falls 20% the year before? The answers give you the goal, the horizon and the client's real risk capacity, which is often lower than their stated risk appetite.
Write the answers down. A one-page note with the goal, the amount, the date and the agreed monthly contribution is your suitability record. If a question is ever raised, that note is your defence. If you never made one, you have no defence.
Use the riskometer, honestly
Every scheme carries a SEBI riskometer with six levels: Low, Low to Moderate, Moderate, Moderately High, High and Very High. Match the level to the horizon. Money needed in under three years should not sit in a Very High scheme, no matter how good last year looked. Money needed in ten years can accept more volatility, provided the client understands that the path will not be a straight line.
The riskometer is updated monthly and can change. Check it at the time of the proposal, not from memory.
Show a range, never a number
The question you will be asked most is "how much will I get?" The honest answer is a range built on stated assumptions. Here is how to present a ₹10 lakh goal seven years away. The required monthly SIP depends entirely on the return you assume, and you do not control that return.
| Goal | ₹10,00,000 |
| Horizon | 7 years (84 months) |
| SIP needed if returns average 8% a year | ₹8,900 a month |
| SIP needed if returns average 10% a year | ₹8,200 a month |
| SIP needed if returns average 12% a year | ₹7,600 a month |
| What you propose | ₹8,900, and review yearly |
Notice the recommendation. You propose the amount that works under the cautious assumption, so that a weaker decade still gets the client close to the goal. If markets do better, they finish early. That framing, "we plan for 8 and hope for 12", is both compliant and reassuring. All figures are illustrations, not forecasts.
Writing the proposal
Keep it to one page. Goal and date. Monthly amount. The scheme category and the riskometer level, with one line on why that category fits the horizon. The plan type, Regular, and a plain statement that a Direct Plan of the same scheme has a lower expense ratio because it carries no distributor commission, and what you offer in return for that difference. Your name, ARN and EUIN at the bottom.
Then ask the client to confirm in writing, even a WhatsApp "yes" with a date. Proposals that are only spoken are forgotten by the client and unprovable by you.
Suitability is not paperwork added after the sale. It is the sale. A client who understands why they are investing, how much, and for how long, is a client who keeps investing when the market falls. That is the whole business.
Remember
- Goal, horizon and real risk capacity come before any scheme name. Write them down.
- Match the riskometer level to the horizon; short-term money does not belong in Very High schemes.
- Present a range of assumed returns, and propose the SIP that works under the cautious case.
- A one-page proposal with ARN and EUIN, plus the client's written confirmation, is your record.
- Never show past returns as a promise; label every projection as an assumption.