When you are in a group of “investors” one guy says “I have this investment”. There would be 5 people pouncing on him and telling him that –

1. it is too expensive
2. your banker has palmed it off to you for meeting his targets
3. your IFA is bothered only about his profits, not yours
4. there are better products available.

I do think that this happens for almost every product. Try saying that “I bought a house in Lower Parel” or “Kodaikanal”. It does not matter, the price was wrong, the broker is a cheat, and you would have got a better deal. In fact, if you want to have fun, dramatically change the price. Say you bought a house in Ghatkopar for Rs. 3 crores, say “I bought a house in G for Rs. 5 crores” and see how they react. At least they will tell you that it was a good buy at Rs. 4…and you can come away satisfied.

The IFA is normally seen as a villain – and it is because…most of them do not even know what you are supposed to be doing. Here is a post…

1. Most people do not know that they need a personal financial adviser.
2. Most people do not know what you can do for them.
3. You can tell them that even a Rs. 5k a month sip can work magic.
4. To reach a big amount of investing you can start small.
5. You hand hold him when he makes a big loss in a big deal which you did not know about.
6. You tell him – sometimes bluntly – that 36% p.a. schemes do not exist.
7. You tell him how to communicate money with his parents, kids, and friends
8. You tell him how much to reveal about his assets – sometimes even to the immediate family.
9. You tell him why he should not be putting Rs. 50L in a PMS when his net-worth is only Rs. 2 crores.
10. You help him pay off all debts – except perhaps a home loan.
11. You tell him why Rs. 5 crore term insurance is not such a bad thing.
12. You tell him that ‘term insurance’ is not because he will die, it is because his family will live.
13. You help him draft a will – a lawyer drafts like a lawyer – he does not understand the personal finance part of the will.
14. You teach his 14 year old kid the power of compounding, and how the kid can have Rs. 1000 crores when the kid is about 60 years old.
15. You tell a grandfather that his grandchildren will remember them going to Paris, London, Goa, Kashmir far more than the Rs. 40L that he is going to leave each grand-kid. Experiences matter more than money.
16. You tell a wife that it is her duty to make subtle changes in expenses, he is too dumb for doing that.
17. You explain why expense records and investment record keeping is far more important than chasing alpha in a big fund.
18. You know that a parent is more influential than an adviser. Hey that is only for 4 months, after that the IFA is talking to the parent and the kids about money.

by the way ‘you’ and ‘him’ includes you, him, her, she…and what have you.

Incidentally you also make a financial plan, select products, give your disclaimers, and invest the clients money. Honestly, that is incidental to the relationship.