I met a well to do Financial Advisor, or rather should I say almost Ex-Financial advisor. He is in the business of mutual fund distribution, given up life insurance and general insurance distribution, does not entertain clients any more for direct equity, and does financial hand-holding for SMEs.

He tried his hand at fee based financial planning, but was not very happy with the experience, so has gone into a semi-retirement mode. I spoke to him, and though it was not exactly an interview some of the things he said hit home.

Vats – let us call him by that very name has an economic background which allows him to choose whether to be in the financial advisory business, has a good qualification and adds value to the family business too.  I thought some of the advisers who read this blog might benefit…so here is what he said:

– Too many people think my time is free and do not like to pay: this has been my experience too, so I can empathise. People call seek advice, and then decide to do what they want to do, but for Vats that is time spent. He spoke about a GM in a consumer durable company – married to a VP in a finance company. They spent an hour with him, spoke about the fees, made the changes and left. Then did not pay. Simple.

– ‘I will pay you if I use your advise client’: this is so funny. It is like going to a hotel and saying ‘I did not like the food, so I will not pay you’ or worse seeing a movie and saying ‘I did not like it’. And it is a cruel world – how the hell will the adviser know whether the advise is being used? He does not have an E-access to all your savings bank accounts, damn it!!

‘Subra, how do I charge for advise like making sure that the client does NOT invest Rs. 50 Lakhs in a hair brained scheme?’…I know that there is only downside. If the investment does well, the client will call up and say ‘see you told me not to invest’ however if somebody loses money, I may not even know…LOL

Vats also (like me) has a very small area of understanding – equities and a little bit o debt’. So largely our advise (fee paid or other wise) is restricted to equities and / or equity mutual funds. This means Vats too does not (cannot is also right) tell you what to do with your gold, real estate, other metals, trading in equities, etc. This is a caveat which he says up front, but people still ask him all these questions….

Well he had other things also…..I do not remember them all…

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  1. Sad but true. “Financial advisors” would rank right next to politicians when it comes to public discontent. And quite rightly so. Most of the advisor community right from IFAs to banks to wealth managers have made it a habit to cut the goose that lays golden eggs. But that is not all of the story. Introspection is needed from both sides.

    If only the financial consumers take a little more interest in learning the basics, just enough to ask the right questions and put the advisor on notice, most of this discontent could be avoided. Yes there are cheats and dumb asses in every profession / business. But the consumer needs to be smart enough to identify those.

    No one wants to learn, even when information reaches them at no cost. Even the most popular finance blog has a readership of about 10-12000. What is the proportion of adult India is this? Just keeping one’s ears and eyes is sufficient in this technological world. just see facebook. You will never find any serious discussion. It is just time pass. A little interest, realistic expectations and willingness to pay for advice would solve most of investors’ problems.

    Blaming the advsior is all fine. At the end of the day consumers need to realize that they are responsible for their decisions and actions.

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