Two interesting conversations with two different Independent Financial Advisors was very interesting. It is worth mentioning here!

Normally the word cheated or cheating is assumed to be associated with the client being cheated, but in these cases it was the adviser who was cheated.

When I started my articles for doing my Chartered Accountancy in Sharp & Tannan it was believed that you should give your advice only when it is sought, and when somebody is willing to pay a price for it. As life went on most of us forget the basics, do we not? So one of my old friends had this experience.

He was referred to a decently successful couple who wanted some financial advice. As usual in his first meeting he took the sketchy details – and simplified their lives. He shifted them from 20 fund schemes to 4 schemes, got them out of expensive life insurance to cheap ones, and did all the chotta motta work. Then he wanted more details – which never came. Whether they did this to avoid paying his fees or for anyother reason is not known, but that is the last he heard from them. Now they may be implementing the suggestions elsewhere!

The second case is of another financial planner who told his client IN WRITING not to buy certain policies, and not invest in certain mutual fund schemes. Then there was a lot of emails exchanged – but when it came to implement, they went directly to the fund house. Innocently they said ‘BUT YOU DID NOT SAY YOU SHOULD EXECUTE THROUGH YOU’. He said fine, then pay my fee – logically it had to be ‘either’ or. They said we already paid the bank Rs. 200 for handling the documents!! Funny if this couple thought that 3-4 hours of a planner were worth Rs. 200 – only thing is I cannot believe it!

Moral of the story:

1. Impress your customer in the first meeting, but be vague. Do not say XYZ fund. Just say ‘a large cap equity fund’

2. Be clear – are you in it for a fee or trail commission. If the client does not know – or you give him a chance that he did not know, you are creating (albeit unwillingly) a escape route for the slimy client.

3. If it is a pure portfolio review engagement, take the fees in advance if you do not know the client.

4. Be clear that you are not in the business of  ‘professional mental satisfaction’ but in the advisory business for a fee income.

5. If you are seeking information from a client – rest assured that all the information will not come in a nice tabulated form which you are used to dealing with. It will come in haphazard form and you will spend a lot of time organising it. Non accountants think they are doing you a favor  when they give you info….this can be taxing on both sides. Those who have filed income tax returns can shed light on this.

6. Once you give away your formats clients will cut, paste, forward, abuse, and misuse the info – rest assured it will go to all their friends. If you do not like this collect fees in advance.

As and when I think of more….or somebody tells me more..I will write.

Thanks A and K for all the inputs – both of them did not want their names revealed.