Are Financial Planners and Investment Advisors only for the Rich?

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Dear Friends,

                       I was talking to one of my Ex. colleagues last week and asked him if he has taken the help of any Investment Advisor to which he responded, “I am not a big guy and such services are meant only for the Rich and Wealthy”. Here is a person who makes close to 10 Lakhs of Annual Salary and is of the opinion that professional wealth management advice is only for Senior Executives in the organization and the rich.  This is not the first instance that I have come across where people have such misconception.  

 Another acquaintance of mine who is a Senior Business Analyst, called me couple of weeks back and said that his boss has some requirement for investment advisor and wanted to pass on my contact details. I asked him, “What about yourself, do you have an investment advisor?” The answer was “Sir, it’s only for people like you (I was a Director earlier with Cognizant) and my boss (His boss happens to be one of the Directors now)”

 I guess now you would have understood the need of this blog. Let me pose some simple questions:

  1. Should the poor and ordinary people take care of their medical problems themselves and not seek professional help from Doctors?
  2. If normal people get into legal problems, should they take up the case themselves and argue and not seek professional help from Lawyers?

If the answers to the above is obvious then why do people hesitate to seek professional help for wealth creation?

Let me preempt and try to cite some of the reasons that people might have, not to seek professional help for financial investments.

I do not make enough to seek professional help

I have been able to make money and know enough to make the right       investments myself

The charges for professional advice is exorbitant and might eat into my wealth creation exercise

You would have heard about schools admitting children with cut-off of 450 to 475+ of 500 marks in class 10 and helping them to get into Premier Medical and Engineering Colleges, and also boast of 100% results for past so many years.

The point is “What is the big deal in selecting children who are already smart and then claim that they have achieved 100% results and provide statistics that so many made it to Engineering and Medicine”. To me, if a government school is able to produce atleast 1 Engineer or a Doctor or a Civil Services Officer, that is a far bigger achievement.

Similarly, if Investment Advisors are meant only for the Rich, will there be a sense of achievement by increasing the wealth of a person who is worth 10 crores to 12 or 13 crores or 100 crores to 125 crores? I would rather take pride in talking about transforming the wealth of someone who is able to save as little as few thousands a month and make an impact in his/her life.

The point is, it’s not that Investment Advisors should not work with wealthy clients and help increase it further, but the impact that they will be able to make at the end of the day.

It’s a globally accepted fact that “Equity Investment as an asset class beats all other asset classes in the long run”. If that is the reason, why is that only less than 4% of Indian investors have equity exposure?

The series of Tax Free bonds that came up last year offering upto 9% tax free returns or close to 13% pre-tax returns (for someone in 30% tax bracket compared to 9% you make from Bank Deposits) was an excellent investment opportunity but why was the retail investors participation was very limited?

When the Inflation today is close to 8%, why is that Indians have huge sums (approx. 80 Lakh Crores!!!) invested in Bank Deposits which can’t provide returns more than Inflation rate?

The answer is simple – Ignorance!

If people from all strata can seek professional help be it in the field of Medicine or Law, the same holds good for seeking professional help from Investment Advisors. You just need to find the right advisor for your requirement and upfront decide on the fee structure for the services that he/she renders.

<Blog #PenguWIN 1011 – Are Financial Planners and Investment Advisors only for the Rich?>

Category: General

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