Two mutual fund agents had similar stories to tell. Am not sure whether other IFAs too have a similar story to tell, but here it is..

I F A grievances:

1. Clients are short term pleasure seekers: both the IFAs have been in the business for more than 10 years and have upwards of 500 SIPs running. Even clients who claim to have a long term view (will it become Rs. 10 crores in 20 years kind of questions) will suddenly stop their SIP and also withdraw their money.

2. SIP returns look less exciting over longer periods! – clearly mathematically challenged clients are difficult to handle. It is really difficult to explain to a client that a 14% p.a. return over a 15 year period is really a superior return.

3. If a client has increased the SIP amounts, the returns look worse!- so true mathematically. If you have done a Rs. 5000 SIP from the year 1999 to 2001, then Rs. 7500 till 2005, then Rs. 12000 till 2008 and Rs. 25000 from 2009 to 2011, the %age returns cannot look too good. This is simply because impact of compounding has been onΒ  smaller amounts and markets are not at new highs!

4. Choosing the right amount of SIP is impossible: For some Rs. 2000 is right for 3-4 years. Once it becomes insignificant they either want to stop or withdraw the full amount. For some clients who do a Rs. 50k p.m. SIP suddenly the accumulated amount looks attractive to make a down payment to buy a house! There is a complete refusal to do a focused event based investing.

5. Neither is the investing scientific nor is the withdrawal scientific! – Suddenly when the markets are down there is a need for ‘doing some attractive equity deal’ or an ‘attractive real estate deal’. Here the easiest money to withdraw is the mutual fund accumulation – so out it goes. This is also because the LIC agent says ‘there is an exit load’ or ‘it is a loan’ or ‘it is an assured return scheme’ – simple words. Customer signs a form or goes on the net and withdraws the mutual fund accumulation. Simple.

6. There are too many people who the client listens to: Immaterial of how good the mutual fund adviser the client listens to the whole world. Blogs, magazines, television, neighbor’s dog, dentist, doctor,….and does something stupid. When it comes to calculating returns, the schemes are blamed. LOL.

7. Clients are impossible to handle Sir: this was the scream of an agent, and I really pitied the agent. When the agent suggested a scheme, the client invested Rs. 5000 in a SIP – and the fund did well over a 4 year period. The client said ‘you did not say this fund will do well or else I would have done a Rs. 25k SIP’. Vow!! this client needs a Nostradamus perhaps?

8. ‘The businessman investor is led by the CA’: Completely agree with the IFA! The CA says ‘do not do a SIP for more than Rs. 16,200 p.m. – we will have to get more details. This forces the IFA to look for 12 schemes for investing Rs. 200,000 a month. I do not think with all my experience I can think of finding 16 good equity schemes for such a paltry amount!

sure there could be more…..but that is for another day!

Related Articles:

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

  1. Subra,

    200000 Rs per month SIP is not paltry by any standards. πŸ™‚

    16 schemes at max canbe a filter to choose the best 2-3 . But not all..

  2. On reading this I remember a western philosopher quote
    ” All are telling humans are rational animals. But I can’t able to find the evidence”

  3. Hello Subra Sir,
    I think you have already answered my question in other blogs. Pick 2-3 specific MF, maintain discipline, stop watching cnbc et al, shut down noise and switch to discovery channel πŸ™‚

  4. hi Subra,

    You’ve got a great blog going. I’m new to investing and i’m facing difficulty finding resources for doing research on stocks.

    Can I get your mail id where i can mail you for some clarifications?


  5. Hi Aditya,

    searched the blog. found the posts and you’re right. Very intuitive information indeed.

    However, I’m looking for some database online or offline( downloadable as an excel file) where i can get the financials of all companies. and then play around with the data.

    So suppose, i want to find out which mid/small cap company is offering a dividend yield greater than x AND which is debt free AND is from a particular sector, I should be simply able to get that info from the data. Since this is not confidential information, i’m hoping it should be available somewhere.

    I’m a simple retail investor and do not have access to any database like capitaline, etc. all i have is an icici direct account with some curiousity to fiddle with data.

    Subra, if you’re reading this maybe you can help.

    Thanks much πŸ™‚

  6. I really wonder why some people do all kinds of research, talk to advisors, blogging, phone calls, queries etc., and to our utter dismay that SIP of Rs.1000 a month is discontinued after 3 months. Credibility is important for me that customer is stayed with investment for minimum of 2 years prior discussing the next scheme.

  7. @Tanmay,

    AM not much aware of such database..

    For dividend based study check on tipblog, amazing guy…

    Else check on for some of the analytics play you looking at…

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>