There are various sources of getting good quality advice- both paid and unpaid. When you pay for the advice you are more or less sure that the advice is MADE FOR YOU and is not generic like ‘equity is for long term’ or ‘take term insurance’ kinda stuff. One more possibility is finding advice in online investor forums and groups. Normally such groups are full of people who say “this works for me, and so it is easy to do, and it will work for you”. This may or may not always be correct – and more importantly you need to remember that some basic mistakes could have crept in…and it could hurt you very badly. Of course, you could do it yourself – but the chances of under-performing is very high.

A few decades earlier if you went to a doctor for a fever or any other illness, the doctor would have let a little blood flow out of your body. If your ‘problem’ did not subside, they would let some more blood. Well, you could simply bleed to death. Then by accident, and not by design, some simple solutions were found – washing hands for example – to have increased average age at which a person dies. When the doctor did this, he was under the HIPPOCRATIC OATH. He was using the latest technology, it was just that they did not know enough. Now over he past 100 years we have seen a dramatic improvement in the quality of medicine and today we get good medical attention – hopefully unbiased.

Now come to the Financial equivalent of the Hippocratic Oath – the fiduciary – it is very difficult to find them in the financial services industry. Let me clarify – the financially competent fiduciary who can handle complex financial queries. Sure there are some online experts who have good intentions, but may lack the qualities of being a good thorough financial planner. Financial planning is about doing a lot of things well. Can we really get good fiduciaries to handle this for a reasonable fee? Well I am not sure. The Financial Planning profession is still in its infancy in India..and over time I have seen the quality of advice increase, but I am still worried that we do not have a good exam or a good regulator in this profession.

Most of the investments in India still happen through the banker – and there is just not enough evidence of good advice.

What is the solution?

WELL, the world is grappling with it…

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  1. Well, I think one of the solutions is to make mathematics fun in school at a young age for kids. That way, as they grow up , they won’t have a fear of mathematics.

    Why maths you may ask ?

    That’s because I have come to an hypothesis by dealing with hundreds of clients that most people don’t know about finance or money management is because they associate finance with maths. And since they found maths ‘hard’ in school, they have an inbuilt fear of maths which carries over to the world of finance.

    So rather than make sense of equity, annualized returns, asset allocation etc, they just take the easy way out and put it in a FD or buy a house.

    Ofcourse this is an hypothesis so… 🙂

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