“I started investing because you gave me the confidence. Thank you!“
This was told by one of my HNI clients who is a single mother of two young daughters. She is a part of senior management at an MNC and earns very well but has never invested other than in FDs and LICs.
She wanted to secure her and her daughter’s future and wanted to invest for the same. She never invested in mutual funds because she was afraid of losing money.
I understood her situation and educated her about the process and what to expect from the investments in terms of risks and returns. With our guidance, she started investing soon, has now built a substantial investment portfolio, and is on track to meet her goals.
Her case of “initial inertia” is not isolated. Many investors don’t invest because:
– They fear that their hard-earned money will be lost.
– They cannot find a reliable wealth manager who understands them and manages their investments in their best interest.
– They have no time or inclination to study about personal finance and investment management.
Due to the paucity of time and interest, many people end up investing in low-yielding traditional products like FDs, LICs, and real estate. This results in not just declining purchasing power with time but also reduces their chances of meeting important life goals.
The best way to solve this problem is by increasing the number of fee-only SEBI Registered Investment Advisors (RIAs) who by design think in the interest of clients.
By regulation, RIAs can’t earn from commissions received from product companies. They recommend investments in zero-commission investment options (like direct plans of MFs) that save you commission and charge professional fees directly from you for value-added services. This aligns the advisor’s interest with yours and ends mis-selling.
There are less than 1,000 RIAs all over India despite the regulation in force since 2013. A recent SEBI Consultation paper to ease the RIA regulation is in the right direction.
Let a million RIAs bloom!
Originally posted on LinkedIn: www.linkedin.com/sumitduseja
