Celebrities funds are poorly managed?

Recently we heard of Suchitra Krishnamurthy taking her advisor Hsbc to court over her funds being poorly managed. She may or may not win the case, but what is the learning for celebrities (and us too!!) from SK’s case? What could she have done differently if there was a second time around?

Well here are some pointers:

1. You need a team of advisers: If you are talking of managing money in excess of even US $ 3 million – about Rs. 10 crores or thereabouts you need a team of people. To me even if you are just a beginner – Unmukt Chand – it is worth assembling a team.

The team should comprise of a CA to keep track of your income, expenses, and file your income tax return. He is the guy to whom you will turn to when you have taxation queries, and the guy who will whet all your agreements.

The second person is a financial planner who will make you articulate your goals, provide clarity, choose asset classes, etc.

The third person is the Investment or Fund manager who will actually invest. This person should be paid ONLY on effort basis and NOT ON THE SIZE of the AUM.

2. Show your credentials please: Asking the team members for their CV, interviewing them, asking them some basic questions is a MUST. Sadly many celebrities feel that once you see a big brand you need not worry about the individual with whom you are dealing. Nothing can be further from the truth. SK for example did not realize that Wealth Managers have SALES targets, not YOUR wealth!!

3. Trust, but Verify: these famous words of Ronald Reagan hold true. Your CA should give you a warning about what is happening on a Quarter on Quarter basis. The days for review should be fixed, and you should show interest in what is happening. Your financial planner should be able to see what the fund manager is doing and what explanations he has a) for increasing risk and b) for reduced returns.

4. Do not blindly trust your friends advisor: How do you think Virat Kohli must have chosen his advisor? He must have turned to Virendra Sehwag. How would Sehwag have chosen? He would have turned to say Harbhajan….the list goes on. So one half competent guy chosen by say Kapil Dev may have got a lot of business just from referrals! DO NOT DO THAT….look outside ALSO before you decide. Have a choice of 3 people for each post.

5. Once in 3-4 years have an independent audit done.

Will all this cost money? The answer is yes, of course yes.

Is it necessary? unfortunately yes. You could also learn a little bit of investing, take a term insurance do a SIP in 4-5 funds and be done with it. You still need a team to see that you are on track – yes when you are ONLY in index funds, MONITORING becomes easy.

So earning a good amount of money (ok in case of SK it was alimony!) is tough for sure, but managing it is far, far more difficult.

Related Articles:

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

7 Responses to “Celebrities funds are poorly managed?”

  1. “How do you think Virat Kohli must have chosen his advisor? He must have turned to Virendra Sehwag. How would Sehwag have chosen? He would have turned to say Harbhajan….the list goes on. So one half competent guy chosen by say Kapil Dev may have got a lot of business just from referrals!” ROFL! 🙂

  2. Sound piece of advice to not only celebrities but for for all of us,even though we may not have large funds to invest. But we do have important goals that we have to achieve.

  3. Managing money is as tough as earning it .
    Why not learn and manage yourself based on keeping everything simple ?
    Is it not better to manage money yourself than managing the people who manage your money ?

  4. Nice one.

    Unfortunately, people want easy route and hence comes the following:
    1. Lack of financial knowledge
    2. Lack of WILL to learn or for that mater ask basic questions
    3. Lack of time (lame excuse but people use it)
    4. LOT of TRUST with many assumptions but NO verification what so ever
    5. I do care BUT ONLY when things go wrong ATTITUDE

    Besides all the above, don’t know where to start! 🙁

    Hopefully, people who care enough and have a WILL to learn will find a way out…. 🙂

  5. Acctualy we havnt any education system regarding Financial management.in india if u have money then purchase land or purchase gold this is told by our forefathers but now a days this is not enough or just waiting for age of 55-60 then start baging.what a horable dream but its true also.every one us rethink about our future.

  6. @ sujit has got a valid point there.

  7. “”US $ 3 million – about Rs. 10 crores “”
    Well Sir, On 12th May I think US$ 3 million would be Rs.164633700 or just about 160000000. But here you have written Rs.10 crores????
    please reply.

Leave a Reply

This blog is kept spam free by WP-SpamFree.