Of course there is talk of Robo adviser and more mechanisation in the advisory business, but let us look at a few different people and how advise changes.
Take the case of 4 portfolios which I help..these are 4 people who are about 80 years of age and fully dependent on their portfolio income for their day to day living.
Let me describe the 4 people first:
- The first investor let us call him Mr. A is a 84 year old widower staying alone in Mumbai and has a man Friday who is his servant, friend, driver, cook, …rolled in one. Mr. A pays him a salary of Rs. 25,000 p.m + accommodation + food. Fair enough. That 46 year old man has been with the family for the past 27 years and knows Mr. A very, very well. Mr. A buys and sells shares and also has some money in equity mutual funds. All his debt is in bank fixed deposits. In fact he feels he has more than necessary money in debt because his debt portfolio will last more than his life time even if he were to draw down from that fund for the rest of his life. His 2 sons are staying in a nearby building and earn a couple of crores per year. Financially very comfortable, physically very secure. The family doc is promising 100 years of age…!! Personal net worth in excess of Rs. 6 cores, dividend income of Rs. 5L at least, and debt investments of about Rs. 50,00,000. Monthly expenses about Rs. 60,000 including the Rs. 25,000 salary…
- The second investor Mr. B is a retired government employee living in Pune. He and his 77 year old wife have a monthly pension of Rs. 110,000, about Rs. 23,00,000 in bank fixed deposits and children well settled in different towns. Do not wish to stay with anybody else, no medical cover from employer, own house in good condition. Planning to move an old age home in the next 1 month.
- Widow, aged 80 years, has no children, completely dependent on me to tell her what to do with her money. Has a big house in Mumbai. No siblings, lives with a helper. Has rental income and interest income from the builder who built her house. He also happens to be a nephew. Net worth Rs. 5 crores – of which Rs. 4 crores is in RE and about Rs. 50L in debt. Monthly expenses Rs. 50,000 including salary of Rs. 10,000 for caretaker cum cook.
- Widower, aged 80 years, staying with son who is not very well off. House belongs to the old man (hence the son’s choice to stay with him). Net worth about Rs. 30L – apart from house of course, and a pathetic pension of Rs. 3227 from a superannuation in 1995.
Fairly obviously all 4 of them cannot have the same cookie cutter solution..personal finance has to be personalised. For the first person (Mr. A) I have regular conversations about the equity markets, move moneys from midcap to large cap or some such stuff, but seriously there is no great value add. He is happy to sit and chat, very alert and asks his sons to invest through mutual funds..as he considers them not wiling to invest in learning investing!!
The second investor is so well off because of his huge pension income that he does a lot of charity and he is convinced that he is being terribly over paid!! He is comfortable in bank deposits, pays Income tax over and above the TDS, and his wife also prefers that. Likes net browsing, is comfortable with technology, Skype, Wassup, chats with people half, or even quarter his age. No great value add, just an occassional suggestion to reduce bank balance and invest in debt funds.
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