Why is it that Kapil Dev or Sachin Tendulkar did not become a good captain, mentor or coach while Rahul Dravid is a truly inspirational speaker?

It is not very difficult to find the reason. All 3 of them are immensely talented, have an awesome attitude, and have trained and practised like mad to reach the great heights that they reached.

HOWEVER, Rahul Dravid, seems to have got the communication equation right.

Now many financial bloggers, financial journalists and financial trainers do not meet and see the REAL BEHAVIOR of investors. They are people who believe what investors say. IFA see what investors do. There is a huge gap. Statistics prove that.

Investors TELL ME IN A CLASSROOM that they:

• Understand Equity Investing
• Understand that they should think long term
• Understand Risk Profiling
• Love simplicity while investing
• Understand Compounding and Asset Allocation
• Understand staying away from noise and keeping out the noise
• Understand the futility of asking 20 people for 40 opinions
• Know whom to consult for what
• Know keeping calm helps
• Know that when they DO NOTHING Mr. Market is busy creating wealth
• Know that they have to be greedy when others are fearful
• Understand what is easy to describe
• Understand that paper work is not so difficult to do
• Kyc is easy documentation

However in reality, IFAs in an IFA class tell me the following:

• Ask about NAV fluctuation in 3 months for a 30 year goal
• withdraw from an equity fund for a short term goal
• do not stick to goals, EVEN, if stated
• listen to many advisors
• do not like to sit tight
• itch for action
• look at immediate past performance and switch funds repefatedly
• asset allocation is repeatedly breached
• qualifications do not matter – investing requires EQ not IQ
• worst investors are over qualified – medical doctors, IIT/IIM – clearly worst
• Chartered accountants make a much bigger mess of their investments than non accountants
• Most investors love money, hate paperwork
• Paperless investing is a nice myth
• Kyc HAS to be done every few years
• Investors with the least education (and therefore least intervention) make maximum returns
• Few evolved investors reward patient, active INACTION
• Stock picking or fund selection is sexy, paper work is boring
• Good investing skills requires IQ
• Good documentation skills requires low IQ

Now if I were not meeting enough IFAs, aggregator companies (there a many of them now) I too would believe  like other bloggers perhaps that  if I can  so can anybody who reads my blog. Not true at all. 99% of the investors I meet need hand holding. I have met many individuals who are far, far, far superior to me in investing.

However, I have hand held many DIY – mostly free, sometimes for a fee, and once for a fee 1.5x the amount that I asked for.

I have friends all over the spectrum, and I meet all of them regularly, and my views on each of them is different. I hate classifying them and saying “everybody needs an IFA” OR “nobody needs an IFA”. I refuse to take a stand on either side.

Some people need a Fee only IFA – if their portfolio is above a particular level

Some people need a Commissioned IFA – if they have a very small SIP based portfolio

Some need a hand holding IFA where they can sound out ideas and do all the work themselves – they too pay for time

Some need an IFA who will do all the paper work – from calculating cap gains, filing returns, etc.

Some need an IFA who will listen and implement. Simple.

So there are various types of engagement…make your choice. If you can do a high IQ activity of portfolio construction and a low IQ work of documentation, be blessed. Few people can do both.

I know people with amazing portfolio skills who employ CA firms for doing the accounting, and a different firm to do research of companies that they have short listed….

Take your pick.