As an observer in the financial services space I meet a lot of finance professionals, and I like that interaction. In fact I wish it was more, but I am not doing much training in the mutual fund, brokerage or life insurance space. Oops thats a crib.

The profession of financial planning should be judging itself by how well it is doing its job, however, they are judged and ranked with the ASSETS UNDER THEIR MANAGEMENT (AUM). Not surprising, but that is how it is.

I like the fact that a lot of the process is now democraticized BUT execution is still a brand. I see people who say I have 900 clients, and I am doing financial planning for them. I seriously keep asking is ‘Financial planning’ scalable or is ‘portfolio management’ scalable.

Can you just do asset allocation and claim to do ‘financial planning’? and do you deserve 1% fees for the same? (I agree after GST and Income tax the net income is 0.5%) or should it be a function of time spent? Should I charge more than a cardio surgeon because I have got the clients to pay in that fashion? Or should I just do it for a fee and make the client build a direct equity portfolio? And do I personally have the competence for that? Or should I get together with a few friends and do a boutique financial services where the customer can get the whole works – financial planning, portfolio management, estate planning, Income tax return filing, investment execution…?

My personal experience and bias says that Financial advice – like a doctor’s practice – is not scalable. This business is NOT SUITABLE for an extremely ambitious person who wants to earn a lot of money. This is something you do because you love it. A surgeon’s skills are NOT SCALABLE. A hospital chain is scalable. The process, philosophy, needs may be similar but implementation is the brand. That is NOT scalable at all. You need to sit and talk to the clients about their needs, likes, goals, desires, pain points, kids, retirement plans – and these are very very difficult to get in writing. Even asking a junior to do this is not so simple. No, I have not experimented, but I am not convinced that styles can be copied. So, repeating, implementation is not so simple to scale. Financial advice, done properly, is not scalable – at least not to the extent a VC would want it, nor at that speed. Stop fooling yourself.

I find that counselling and coaching are more like financial planning. And we know that those cannot be scaled. You have to empathize, you need to customize, you need to ask about them, their financial insecurities, clear some ideas planted by their CA (if you are a professional you SHOULD borrow money to buy a car, house, etc. EVEN IF YOU HAVE your money, LiC and PPF are the safest places to invest). This is not scaleable. Even if a person reads about it, he may not believe it or accept it. What do you do?

Empathize, show patience, teach, evaluate on risk, – how is this scaleable? Will a junior be able to draw out all the insecurities of a person? Will the client talk to the younger financial planner about his retireent?

Just a portfolio by itself is not a financial plan. It’s impossible to offer legitimate, correct and perfect investment advice without understanding the potential client’s overall financial picture. I am not sure I can do it over the phone or with questionnaires filled in by a client all by himself. The best investment management advice and plan won’t do clients any good if it’s not built into the life style of a client IMPLEMENTED. Trying to separate out the costs of investment management (AMC charges) and financial planning will not work.