I am a runner. A bad runner, let me warn you. However, I meet a lot of good running coaches. The best coaches give you simple advise.

For a beginner it is just “get up every morning and run” and “stay motivated”. After he becomes a regular runner, the trainer includes speed workout, hill work out, yoga stretches, long slow runs…..and a lot of variety depending on what the runner wants to achieve. Then he gets to specific training like strengthening of legs, core, etc. and helps him improve as a runner.

Most coaches tell me one thing. When an amateur comes to them for the first time, it is the job of the coach to do the following things:

a) REDUCE the amount of running the advanced amateur does

b) INCREASE the intensity of the Hard runs

c) REDUCE the intensity of the recovery runs

d) Make him/her join a gym to increase strength of specific muscles.

End of story. Cut to financial advisory.

It is not easy staying simple. Most people come with 20-120 schemes, 9 fund houses, all options – dividend payout, reinvest, growth. Cutting it down to 4 schemes is a good starting point.

As advisers specialize there is more worry about them going into jargon and intimidate the client. The MF industry has not helped by creating various categories. Giant, large cap, mid cap, small cap and micro cap. Is there any evidence about their co-relation? or about lack of co-relation, should there be a fund house concentration? Tough to say. Let us take the example of advising a client on the BUSINESS INSURANCE needs. Clearly, you need to be a specialist. Not every general insurance agent who sells health and car insurance can handle complex business insurance needs. However, that too can be (should be) kept simple. However, I will take simple portfolio advisory for an example – as more people will identify with the same!

Using portfolio reconstruction as an example, here is a sampling of good questions that get to the core of the issues and choices quickly, and helps the  engagement to begin with:

1.  What is your portfolio worth to you personally in the way of earnings and capital growth?

2.  What is it worth to your family, or your estate?

3.  How is that value going to get to them if you aren’t here to manage the portfolio?

4.  The person who created the portfolio had passion, do you have interest/ inclination in handling the direct equity portfolio. If not will you just trust your Relationship Manager to do it for you?

5. Which family member is likely to influence you / learn with you / participate in the managing?

6.  What are the things that could prevent you being able to manage the portfolio on your own?

There is no harm in having a 12 year old child participate in this discussion. No jargon so far, if you have mentioned that a portfolio means a list of their financial assets.

Such a conversation shows a good understanding of the markets, risk, and assessing the investors need for portfolio managing, risk and of course insurance. It is enough to start the relationships. No ppt, no statistics, no boring excel sheets, no what if scenarios, no explaining large cap vs small vs micro. I am yet to meet a fund manager who has been able to justify intellectually why such classification should be made at all in a portfolio. We just do not have enough evidence, if you like evidence based investing!!