But often this resolution is marred by the greed and unethical behaviour of the so-called “trusted” relationship managers (RMs), mutual fund agents/distributors posing as financial planners and brokers.

These so-called advisers (RMs, mutual fund agents/distributors, and brokers) lure you, innocent investors with tall claims of free advice, complimentary financial planning and  doubling wealth in five years, by offering exotic products (which you do not need) and pushing Unit Linked Insurance Policy with a return of 20%, pension plans with guaranteed corpuses and huge monthly incomes, etc.

It’s a well-planned and researched conspiracy to fill the pockets of the RMs, brokers, and distributor with hefty commissions, while you come out looking like a fool.

A fool because you failed to see through the trap laid out by these so-called adviser who put their interest at the forefront.

Think about it, on 1st January, you must have received a call or text or email from your so-called “well-wishers”, wishing you a happy new year, all the while quietly slipping through a pitch for a newly launched mutual fund scheme, ULIPs, Pension Plan, Sectoral and Thematic Fund, or a 400% return giving stock.

If you did not receive such a call, congratulations, you were spared (for the time being). But if you did, welcome to the world of mis-selling and unethical advisors.

These so-called advisers (unethical RMs, mutual fund agents/distributors posing as financial planners, and brokers) have only one objective – Filling their pockets with hefty commissions.

They do not care whether you make money, or lose it, for them it’s all about the commissions. They lure you with “free-advice”.

The minute we hear the words, “free”, we have a tendency to lower our shields of intelligence and surrender to whatever the RM is suggesting. Our rationale being, since it’s free advice, the RM is definitely not getting any incentives for the suggestion, so why would he suggest something bad for me?

If only it were that simple, and if only the world was that good.

A similar incident happened with one of PersonalFN’s long standing Wealth Planning clients, Mr Rakesh Bedi (name changed).

Mr Bedi (52) currently heads a pharmaceutical start-up in Mumbai and has been PersonalFN’s valued client for the past seven years.

Like the pharmaceutical sector, Mr Bedi’s story has also witnessed a turn-around for the better. When Mr Bedi approached us in 2012, his finances were a mess.

Table 1: Existing Portfolio - a mess!

Financial Instrument	Quantity	Average Return	% of salary paid as premium / SIP	Return guaranteed by the "so-called advisor"
ULIPs	15	5% - 6%	20%	15%
Endowment Plans	10	2.5% - 4%	20%	12%
Pension Plan	3	3% - 5%	10%	10%
Sectoral & Thematic Funds	7	(-)22% - 8%	10%	20%

Mr Bedi was under the illusion that since he managed to save 60% of his monthly income, his wealth would automatically grow many folds. However, once we started our in-depth analysis, the true picture made him cringe.

Even though Mr Bedi had saved 60% of his income (commendable), his money wasn’t working hard enough for him. He was earning a meagre 6% on his ULIPs as opposed to the 15% CAGR guaranteed by his RM, “free-of-cost”.

His traditional endowment plan sold to him “free-of-cost” by his maternal uncle were giving him an annual return of 2.5% - 4% and his pension plans were not faring well either with a maximum return of 5%.

His mutual fund distributor had sold him seven thematic and sectoral funds, all with the promise of 20% return, again “free-of-cost”, but in reality, his return from the funds were 8% with a -22% return for a couple of years back in 2009-10.

In 2002, his RM, through the “complimentary” financial plan has guaranteed that if he saved Rs 45,000 per month for the next 10 years in ULIPs, he would get Rs 1.25 crore in 2012, thereby helping him achieve his goal of sending his son abroad for higher studies.

[Read: Step-By-Step Approach to Plan Your Child's Education Needs]

In 2012, when the goal arrived, Mr Bedi wanted to withdraw from the corpus, but was shell shocked to see that the corpus was a mere Rs 74 Lakh!

His investments did not grow at 15% CAGR as his RM had promised, but rather at a lousy 6% p.a.! Mr Bedi was dejected. He had to take an education loan to fulfil his financial goal.

[Read: Here’s What Could Make Or Break Your Financial Goals]

For 10 years, Mr Bedi had invested his hard-earned money based on the “free-advice” of his RMs and uncle, and all it got him, was in a financial mess. Needless to say, free-advice had cost him a bomb.

Feeling dejected and helpless, Mr Bedi finally enrolled for PersonalFN’s Wealth Planning Service in 2012 and got his finances sorted. We made him surrender his useless ULIPs, endowment plans, pension plans, thematic, and sectoral funds.

Instead a carefully researched and well planned portfolio was created for him, from scratch, keeping in mind his risk apetite, wealth aspirations, and age.

For the last seven years, we have reviewed the portfolio once every quarter, and have guided him through market ups and downs. Now, his portfolio reflects his wealth ideology and his wealth truly works hard for him.

Mr Bedi has been with us for the last seven years and has seen his portfolio being managed by experts, professionally and ethically. Advisers have changed, but PersonalFN’s ideology, when it comes to managing investors’ wealth has stayed intact for the last 18 years, and will continue to do so for the coming years.

At PersonalFN, we don’t encourage following free-advise carelessly.

Mr Bedi turned to PersonalFN in the nick of time and has been avoiding free-advice since the summer of 2012.

Ask him about what makes him come back to PersonalFN year after year, and Mr Bedi smilingly quotes Mr Buffet’s clichéd line, “Price is what you pay, Value is what you get”. ‘I paid a price by taking free-advice and now I’d rather pay your advisory fees and get valued wealth management. You guys are seriously value for money’ (His words, no exaggeration!).

Every advice, especially, the one provided by your best friend, or uncle, or google, or newspaper has to be carefully evaluated and researched. If some free advice has worked for your friend, it does not guarantee that it’ll work for you as well.

PersonalFN’s Wealth Planning Service is a tailor-made service, wherein a dedicated financial planner is assigned to you and is responsible for managing your wealth professionally and ethically.

PersonalFN’s Wealth Planning department has been operational since 2000, and over the course of these 18 years, we have amassed a loyal clientele, clients who have been with us for 18 years and have a firm belief in our ideology of wealth management.

The last 18 years have helped us grow as researchers and financial planners and we have ensured that our clients have grown along with us. Everything we do, keeps our valued clients as the central focus.

Growing wealth is a result of two factors, earning the wealth and then skilfully managing it. You are an expert at the former, we are experts at the latter.

If you too are tired of the endless marketing mails and traps by your bank RMs, mutual fund agents/distributors posing as financial planners, brokers, and wish to have a wealth manager that takes into account your ideology with wealth and shares your vision, look no further and connect with PersonalFN’s Certified Financial Guardian on 022-61361200 or write to info@personalfn.com. You may also fill in this form, and soon our experienced financial planners will reach out to you.

Till then, Happy Investing and a very Happy New Year!

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Ajit@khetle.com Jan 06, 2019 Personal finance planing charges

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