I am asked the following questions while on air or in the blog…or in a class room…and I seriously have only one answer…

What are the questions?

• I have 30k to invest where should I invest?
• I have sip in …..xyz fund, abc fund, def fund,….is this good?
• I need Rs. 100 L for my daughters education after 14 years where should I invest?
• I have life insurance provided by my employer is that enough?
• I have a group medical policy do I need to buy some insurance on my own too?

Honestly if you are going to depend on a blogger or a television program to take these decisions for you, OBVIOUSLY something is wrong. Just because somebody tells you that you do not need an adviser, it does not mean you do not need an adviser.

Knowing how to invest (even assuming you know that) is just not enough. A good adviser (yes that is not easy to find) will help you write down your goals, ensure that record keeping is done properly, nominations are correct (and updated), get the asset allocation right.

If you want to be investing in direct equities – it requires a fair amount of hand holding. Sadly hand holding facility is not available – for love or money. You may not require a broker (an online broker will just work fine), but a guy who will decide on portfolio size and weights is invaluable. You could end up with a good portfolio – but if you get the sizing right, you could make it a great portfolio.

In equities it is not about getting it right or wrong – it is about how much money you make when you get it right and how much you lose by getting it wrong.

One big problem is that the media and many bloggers think that the IFA’s job is to do your portfolio selection. Actually that is only 5% of his job. For example your Ifa asks you to buy Birla Frontline Equity, but it is Mirae Emerging blue chip which does better, should you blame your IFA? No. He (like 99% of us) had no clue that Mirae will out-perform Birla or the reverse. Some of the big fund houses (past glory) are not providing good results. Index funds MAY outperform the managed funds. We have no clue when, by how much, and whether it is worth – after the expenses.

The IFA should be :

• interested in your business
• be truthful about what he does not know (debt market is one obvious place)
• help you in your documentation
• be willing to communicate across generations – your parents and your kids!
• Hand-hold you during difficult times
• Help you choose appropriate products based on goals.
• Make inter-generational transfers easy – help in documentation

It is not that picking good funds is not an IFA’s job, it is just that your guess is as good as his. However the IFA is also a victim of bias just like you are.

GO AND GET AN ADVISER: this is the only answer. Trust, but Verify. Keep it simple.