Do you customarily turn to you adviser for asking him questions related to investing? For picking schemes? for tips? for generally chatting about the market?
Do you get an answer which is difficult to find on free / paid websites?
Do you think he/she has given you good advise over the past 3-4-9-15 years that you have known him?
Or do you think he is only there to pick some schemes / fund in which to invest? Does he tell you how you should interact / react to your bank RM pestering you for buying a life insurance / etc.
I meet many people unhappy with their Ifas and many many IFAs unhappy with their own lives. So apart from cribbing about the regulator in bodies created just for that…they crib about their own adequacy (ies) too. The grief that the IFA have is generally these:
- they missed the change from bull to bear market
- they did not capture enough of the bull market
- they did not protect the client during the bear market
- the client pulled out at the wrong time
- the client invested too much at the wrong time
– I find the whole thing funny, because it is all talk like a FUND MANAGER. Every IFA meet becomes a place where every IFA is calling on what will happen in the market. Most of these griefs above can be traced to these cats hoping to be tigers. When markets are sideways, they have no clue what to do, so they’re just plain frustrated. When they try to anticipate these movements (and be guilty of trying to time the market – which they tell the clients they should not do!) they usually fail and when they don’t – a very rare event indeed – their next move ruins the previously done good work! They start from scratch every day and living from transaction to transaction, dependent upon the (presumably) maverick markets for survival.
Lets look at the advisers who picked Hdfc as a fund house for their investment ideas. Poor execution by the fund house has left a lot of red faces and saying ‘this quarter it will be different has not helped’. Seriously, that has hurt many IFAs. Own execution of ideas in the stock market have been torn to bits by the RR bulldozer on PSU banks. So the PSU bank scrips which looked good 3 months ago are looking even better, but the client’s face (and some other part!!) are red. Deep scarlet red.
Client behavior of removing money half way through the journey has not helped either. Poor execution combined with poor client behavior – of stopping the SIP, removing the money from the fund, risky exposure by debt funds – damaging the NAV, have further accentuated the problem.
MY VIEW OF THE PROBLEM?
Wrong priorities (of the IFA, by the IFA) include:
- a TOTAL failure to manage to personal needs, goals and risk tolerances
- “plans” that gyrate with every market movement
- Not reducing most of these plans to written plans for clients with slightly poor understanding
- clients with “huge” appetites and tolerance for risk when markets are rising
- Many clients frequently want to go to cash at the first sign of trouble
At the advisor level, the problem is fundamental and encompasses each of these problem areas. Much of what tries to pass as “financial advice” is actually stock-picking or fund picking.
In my experience, most advisers and their clients WRONGLY think that the adviser’s ONLY function is to pick good MUTUAL fund schemes.
Sadly not too may people try to break this MIRAGE.
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