Thursday Trivia ~ A trait that your Personal Finance Advisor must have!

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Thursday Trivia ~ A trait that your Personal Finance Advisor must have!

Last year, I was shopping for a good family car. I read a lot of reviews, spent countless hours with friends on which car to buy and even drove some of their cars to understand the feel. Considering all the advice, I narrowed down on buying Maruti Brezza – a Mini SUV. But that’s not the car I bought. 

Why? After spending close to 100 hours on thinking about which car to buy, I bought something else.

Here’s what happened!

On visiting Maruti’s showroom at Lower Parel, a sales guy greeted me and my wife. He had just 1 question – have you made an appointment for test drive? I politely declined on the humble mistake. He didn’t say much. He took us to the car and explained all the features. After which he simply handed his card and said that if we wished to buy the car, he will help us out with the details.

Well, it wasn’t a good feeling. Even though we had made up our mind on which car to buy.

Then we walked towards the Maruti’s Nexa showroom which is just 20 steps away. And when we came out, we had already booked a Maruti Baleno along with a test drive.

So, what worked?

The salesperson who met us at Nexa was very much interested in the way I drive a car. We had a good conversation around my driving behavior, distance and most importantly fuel efficiency. Most importantly, the salesperson recognized that I’m too impatient with parking. Hence, we were recommended luxurious hatchback Baleno. 

Trust me, it’s the best decision. The car has given a fuel efficiency over 16 and drives like a charm. And with my style of driving, it’s perfect.

I’ve recommended that particular salesperson to a lot of my friends. The reason is simple, that sales person is interested me rather than the car. That’s a trait I like when we go for a big ticket shopping.

Let me draw a parallel to personal finance.

Planning your finances and making an investment decision is an important aspect of our financial health. It’s a big ticket decision that impacts our next 5 to 10 years of life at minimum. Yet, most of us often take it loosely.

I’m also guilty of making my set of financial mistakes before bumping into Mr. Saurabh Mittal, Founding Director of Circle Wealth Advisors Private Limited.

As part of my mistakes, I had lent to a builder’s channel financing agent who promised me 18% a year. Due to this, my eyes were fixed on only one part – returns!

Hence, my conversations with folks would only be around returns. Stock Market is a place where there are stories of overnight riches and bankruptcies. As shown in the awesome series of Scam 1992 where Harshad Mehta earns Rs. 3 lakhs in 3 years and loses Rs. 10 lakhs in 10 mins. (If you’ve not seen the series, I recommend watching it fully. Pratik Gandhi as Harshad Mehta is a treat for Gujarati eyes.)

Coming back to our conversation – ideally, your personal finance manager should be interested in you. It should be a basic trait in a personal finance professional.

Here are a three simple points to check whether your personal finance manager is interested in you or not:

Firstly, when the meeting starts, does it start with reviewing your investment portfolio against some godforsaken benchmark or does it start with any changes in your life in the past 6 to 12 months.

Reason: The job of your personal finance manager is to be interested in your life. Whether you wish to upgrade your current Honda City to Skoda Superb or want to go to Switzerland for an international vacation next year.

When your personal finance manager is more concerned about beating some benchmark with investment portfolio, they tend to miss the bigger picture – YOU.

Secondly, always ask for Minutes of Meeting with your personal finance professional. Do the minutes reflect conversations about returns or your personal life?

Reason: Minutes of meeting often reflect what is more important to the personal finance manager. Wheat often gets separated from chaff in here.

Lastly, after the meeting always reflect, whether your personal finance professional was busy talking about himself or you were the one who spoke about yourself the most?

Reason: If your personal finance manager is speaking all the time, it means he is not listening to you. Since you should be the center of his attention, it’s important that he should be listen to you keenly and pick up what’s important to you and what’s not. 

So how do you find a personal finance professional who is super interested in you?

The answer to this is extremely simple but very difficult to follow.

Opt for a fee based personal finance professional. 

Imagine you go to a doctor who tells you, ‘don’t pay me fees, just buy these medicines and you will be fine.’ Or you go to a Chartered Accountant and they say, ‘don’t pay me fees, we will settle with income tax agency whenever the scrutiny comes up.’

Will you be comfortable in dealing with such kind of arrangements?

Think about it as subscribing to a newspaper or a magazine rather than reading them for free. In both the cases, you get the content but the difference is that a newspaper or magazine when subscribed will have no advertisements giving you a far better reading experience than the free one which is completely filled with advertisements.

In the same fashion, when you pay fees to a personal finance professional, they are obliged to work for you and not for an investment management company. At some point, we should stop incentivizing this behavior of commissions and pay them directly. Huge plus point that works in our favor is we can demand transparency because now they represent us.

My father’s generation has made this grave mistake. An old uncle who represents a certain life insurance company visits our home and we start thinking about investing in that product rather than thinking about how to retire early. In that, we have ended up paying them huge premiums for a modest return of 6 to 8% compounded. That investment hasn’t even beaten our lifestyle inflation. While that old uncle made good commissions from our investment. 


It’s not that every commission based finance professional is bad. The intent behind asking you to pay fees is to rightly align your interests. Just as you won’t be comfortable with a doctor who earns commissions from medicines prescribed, same way aligns the incentives from relying on commissions to paying fees directly.

Let me end it with a beautiful quote that summarizes the blog effectively, ‘Personal finance is more personal than it is finance.’

— Jinay Savla


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