When a client with Rs. 30L exposure in mutual funds – largely equity gets a call from a client saying “I wish to sell my SPARE house worth Rs. 3 crores and put it in a mid-cap fund” how should he react?

As a Trainer one could just say “i think its too risky” or something and move on. However, as an IFA one has to be polite. After all there is an existing Rs. 30L relationship to worry about. Also the client is perfectly capable of going to another IFA or bank and invest. End of story.

However, a sincere IFA with the clients good at heart will do something like this:

IFA: Madam it is a good idea to shift from Real Estate to Financial assets, could we meet and discuss?

C: Yes sure.

IFA: you are 55 years of age and you came into the market only about 3 years ago, and you have been very smart.

C: Is it a good time to sell real estate?

Ifa: that is a difficult question to answer because you are asking me whether RE will go down AND will Equity go up!

C: Yes, I thought you are supposed to know that!

I: No! I do think that if you do invest say Rs. 1Cr. over a 20 year period you could get about 12% cagr

C: Listen I will have about Rs. 2.5cr to invest not 1 cr.

Ifa: Yes M. I was suggesting that we will invest Rs 1 crore in equity and about Rs. 1.5 cr in a combination of debt funds – liquid, short term and long term funds, and hybrid funds with an equity bias.

C: why not the full amount in Hdfc mid cap opportunities fund – it has performed well in the past has it not? and you only chose it in 2014, right?

Ifa: Yes madam I agree. I am just saying we will increase out scope now to inclued Motilal Oswal and Mirae fund houses too – apart from Franklin, Icici Prudential and Hdfc.

C: so you do not want me to invest the whole amount in one scheme?

Ifa: No Madam, we will select about 5 schemes in which to invest – and the equity through STP over a 6 month period.

C: one bank RM saw my portfolio and said “Instead of investing as STP in 2016 if you had done one time investment in a DIFFERENT fund your Rs. 10L would have become Rs. 12.8L instead of Rs. 11.6L in xyz fund”.

Ifa: Maam you need to accept what happened. You were new to equity and you wanted to put it in a bank fixed deposit. I coached and hand held you through a STP, and you agreed. Secondly the bank RM has aggressive sales targets so he will push you to more equity, I am interested in protecting your wealth WHILE growing it. So I have a different strategy.

C: Ok then, let me decide.

Then 3 weeks later client has invested Rs. 2.5 cr in an aggressive mid/small cap fund, one time.

Bank RM went to Europe. Ifa went to Lonavala I guess.


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