You have found a new adviser and you hope to build a great relationship. You are meeting him…maybe for the nth time and what are the words that you just do not want to hear:

1. Your risk tolerance is high: Hey dude, I am myself not sure how I will react to a 35%fall in my portfolio.

2. This time it is different.

3. The Midcap out performance is here to stay.

4. Derivatives

5. I can create a direct equity portfolio that will EASILY out perform Hdfc Top 200 and I Pru Discovery.

6. We will use some strategies which are normally used by Hedge funds.

7. We can EASILY ‘future-proof’ your portfolio.

8. We can predict that the interest rates will go DOWN in the near future, but over the next year it might actually go up.

9. We have some non traditional investments that I want you to consider.

10. These are portfolio houses, managers, and strategies that me and my team has carefully selected and hand picked for YOU.

11. Seeing your risk profile, we will target smooth equity returns.

12. Out performing the Sensex is easy – all our fund managers are regularly doing that, AND will continue to do so.

A dirty dozen is good no?

There is a major problem with the BFSI. Most of its players are here trying to impress the clients who want to invest. THAT is the problem. Face it, most clients want a decent REAL RETURN that will help them achieve their goals. I have not met any investor who came to “be impressed” by me. They could not care a damn about me UNLESS they were convinced of the following:

1. I will talk in a language that they can understand (I am in a minority, I know!!)

2. I will keep it simple.

3. I will repeat it more if you have not understood.

4. You do not need sexy, un-understandable products which give you sub-par returns

5. You honestly do not need weekly monitoring and monthly fund switches. Seriously you need only if we are nearing an event.

6. The best way to meet small goals is from current income. For example if you can pay his Engineering fees from your current income, do not disturb your portfolio.

7. You have led a simple life, you are continuing to lead one. Your ‘financial plan’ has to be a one sheet plan which your daughter in class 6 can understand.

Sadly there is a vested interest in selling complicated, capital protected, future proofed investments, with hedging strategies and smooth equity returns.

When you hear those words, do either of the following:

1. Ask him/ her to turn around and give a nice kick – choose which ever part of the anatomy

2. Turn around and sprint. A good 500 metres

Either way the relationship would be over.

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  1. 12 more reasons my tagline for your blog – Subra: My Defense Against the Dark Arts – continues to strengthen and is duly fwd’d to scheming unsolicited RMs…

  2. that is one reason I have not been giving appointment to my bank RM who has been quite persistent for a one on one meeting 🙂

  3. sir, excellent content on this site compell me to visit it whenever i switch on my computer. max possible saving for max possible time can look after anything within our reach, rest GOD will take care. only question is where to invest these savings. heard a lot and lot about equity and was fully convinced, till few days back when i happen to read article “Dollar Cost Averaging aka SIP analysis of S&P 500 and BSE Sensex” on ‘freefincal.com’. and that is actualy not an opinion or article, BUT HARD FACTS calculated mathematicaly. what they bring out is one aspect which is missed in “EQUITY BEST” debate and is also not brought out (unwittingly, of course) by the author is that ‘GOVT BONDS CAN NEVER BE NEGATIVE OR BELOW INFLATION where as equity can some time be, even SIPs in 15 yr span'(of course tax treatment for debt and expences for equity is not catered for). your considered view will help everyone regards

  4. Dear Sir,
    I have been reading your blog regularly for the past few weeks and really amazed at the speed and quality of the content you are able to generate. I have enjoyed reading each one of them and learning quite a lot from them. Hope I get an opportunity to meet your in person and have a chat.

  5. In one of the remote places that I visited recently, there was a banner on the ST stand. It was loud and clear:
    “Double your money in just 12 months. Invest in equity, NOW”

    The author had also arranged for necessary mathematical proofs on the banner with a small star mark

  6. Recently I told my prospective client we can expect 12% in mutual fund if he stays invested for 10 years and ie is sufficient to beat the inflation and explained the risks involved in equity investment, Finally he didn’t invest in mutual fund, After some time i came to know he bought a plot outside bangalore where the builder has given assurance of doubling his investment in 2 years.

  7. @baljit
    ‘GOVT BONDS CAN NEVER BE NEGATIVE OR BELOW INFLATION where as equity can some time be, even SIPs in 15 yr span’ i think, that is not true, or at least ‘ half truth’. first thing, an average retail can’t afford to buy govt bond directly ( it requires Rs. 5 crores, as i understand from a recent post on this site.) , and indirect investing in govt. bond through bond funds give market return (not the coupon rate return) , which , many times, could be inefficient to beat inflation , and sometimes, even negative.

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