A friend with about Rs. 80 crores on mutual funds was approached by a ‘Wealth Manager’. No. I do not wish to name the WM or the company he represents. It is too much of a give away even as it is.

His name was referred to by his brother in law who had gone to that ‘ND’ as they are called (national distributors)…and was supposedly happy with the arrangement. He had about Rs. 40 crores in assets…and had made that shift.

The idea of the WM was simple (according to me)…go to a client (prospect) and reduce his costs by re aligning the assets. Yes it makes sense to let some blood flow – after all it was not your own blood!!

So this team goes around the country and convincing rich, very rich and very very rich to change their mode of holding…so that they can now get LOWER management fee. Makes sense?

Eminently. Makes a lot of sense especially if you are well funded and can keep the game going on for a few years by which time a fancy man will come and pay you valuation!!

So is somebody doing this in India too?

yes. And the rich are falling for it.

So the man who had moved his aum…was then asked to buy debentures (moving the money from a debt fund, of course) he balked. Well, he was convinced to buy a Real Estate product – a flat with a short down payment. So off he sent the first payment….and now he is stuck with an Impossible to sell high priced flat. How much did the wealth manager make in the deal. Well about 5% for a one year product.

How much did the client save?

Ha ha ha………………..heads I win, tails you lose!!