Last week Mitu Samar, a Corporate Communications expert spoke at the Monthly meet of Network FP and many of you must have watched it online or attended it live.

She said ‘stop doing the same things’ – you cannot build a brand by copying. So true. I cannot create a newsletter by reading Naren, PJ, or who have you and sound ‘independent’. More importantly, IFA talking about the markets is boring. So let me tell you some of the phrases that bug clients – this is a client feed back too – and some of you may find it amusing.

  1. ‘Markets will be Volatile’ – JP Morgan said this 200 years ago, and saying this is equivalent to saying ‘there will be waves in the sea’. We know it. Everybody knows it. All times are volatile, and if the markets are not volatile for some time, so be it.
  2. We do “Comprehensive Financial Planning” or “Holistic Financial Planning” – will you please tell me how this is different from ‘financial planning’ that all of YOU are supposed to be doing? Beats me. I also do not know how necessary it is to do a written down financial plan for a client who will not follow it. Sure a checklist makes sense – you should know that you have covered all the angles, but calling it ‘comprehensive’ sounds hilarious.
  3. ‘We will do Asset Allocation’ – it is the job of the adviser to advise on asset allocation. It is the job of the client to DO asset allocation. The client takes the risk of volatility, as well as the risk of not having enough money to meet the goals. No point in taking the blame – the adviser has to understand that he is NOT the person taking the risk, it is the client.
  4. ‘I got you 54% return in Infra funds last year’ – face it, you did not, it was the market which got him such returns. YOU WERE LUCKY enough to have chosen that fund. You could have missed it completely. It was some thinking, some planning, some gut feeling and TONS OF LUCK.
  5. I have created a ‘customized portfolio’ for you. LOL. Most portfolios created by one IFA look similar. Most of us develop some favorites and we have the same funds in the portfolios of most of our clients. I do like Hdfc Prudence – and its high cost has not deterred me from keeping it in many or most portfolios. That’s me. No, the portfolio is NOT CUSTOMIZED. I used to ‘customize portfolios’ long ago when I was a broker. Each client’s equity portfolio looked different – even if they had commonalities. We had about 200 clients and I knew most of the portfolios well enough to do meetings without much paper work. So if we’re all using the same masala then how can the bhaaji taste that different? Oh, you mean to say that instead of 55% debt, 10% cash and 35% equities for a conservative portfolio your version is 53%, 17%, and 30%?
  6. Independent, Fee-only adviser – the most beaten to death statement. When you say RIA it should mean this. Then the fund house should NOT KNOW THAT YOU EXIST. The minute they know that you exist, they will compensate you. Some of us know that they do. While I agree that being paid a fee rather than a commission SHOULD motivate somebody to act in the client’s best interests, this isn’t a great marketing point. There are many independent RIA  and are not (hopefully!) associated with a mutual fund or insurance company. So if this is your main claim to fame then it’s like saying you should hire us because we have a fore-head. Every IFA isn’t an evil, commission-grubbing, greedy thief! Many of them are my friends, and are well compliant. I’m not trashing the value of independence, but saying that ONLY independent people can give good advice is plain bullshit, and some portals, websites and the MSM are taking it to great heights!
  7. “I have integrity”. Lol. Damn it IFA, you do not have too much of a choice. Who do you think you are? A fund manager? what can you do if you do not have integrity? Not much I guess. Stop saying you have integrity. That is assumed. If you did not have integrity, you may not have survived 20 years I guess. Ifa do not have too much of a choice – you are just taking a cheque from the client to the Amc. If you are guaranteeing the integrity of an AMC – you are amazingly brave or plain incompetent or foolhardy. Gimme a break.
  8. ‘We can invest like….X’ – fill it up with Warren Buffett, Vallabh Bhansali, Rakesh Jhunjhunwala, Prashant Jain….what have you. YOU CANNOT. Whether it is creating a portfolio of selecting an amc created portfolio. Do not tickle the client, he will laugh. If you are really that good and can create value you will NOT NEED to talk about it. You will surely not be an IFA.

there are more, but did not want to give you more than 800 words to read!! Merry X’mas!!

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  1. Sir, What is MSM?
    “Some portals, websites and the MSM are taking it to great heights” – Can you list a few which would be helpful?

  2. Dear Subra Sir,

    I was in the process of selecting an advisor based on inputs from another website, because I got the feeling from there that FEE ONLY RIAs are better But after reading your article I feel that it may not be the best idea.

    I also feel that selecting a good IFA/RIA would be impossible for people away from the Finance field. The selection of an advisor can be done either by self assessment (applicable for people inside the field of Finance) or by taking the word of mouth of others (others- like you who are associated with many RIAs). Many of us (non finance field associated people) here would blindly follow your advice of IFA/RIA, but alas, you do not want to tell.

    So I guess we have to live without IFAs until you help


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