Friday, June 30, 2023

Who the hell needs an advisor? I know everything.


Namoshkar, welcome to Mon Money presented by Content Crankers. We are back with a new episode, but before we move on, let us take a look at our opening screen.

What we will discuss today is a common question. For example, Utpal babu from Burdwan has asked us why we need to go to an advisor. What more do they know about my investment needs? Well, he may not have asked it in so many words, but that is the crux. I am Suparna Pathak, and with me is investment advisor Saibal Biswas – let us put the question before him.

Saibal Biswas: We may stand in front of a mirror and lapse into a monologue, but do we have all the right answers to our questions? We don’t. That is why we need mentors, colleagues, and subordinates… we feel that it is always prudent to get a second opinion. Finance is no exception. And for getting our decisions evaluated, it always makes sense to approach someone who has domain knowledge, someone who has studied the subject. This is a very basic rationale behind the importance of an advisor.

Now look at it this way. Suppose your age is X and mine is Y, our risk-taking ability may not be the same. Our goals may be different. Our investing ability may be different. Even, our financial outlook may be different.

Suparna Pathak: even if our ages are the same, our investing abilities may differ…

Saibal Biswas: Exactly. We tend to box things in. We tend to say that the risk-taking ability of a particular 25-year-old boy will be similar to that of another 25-year-old. But it may not be the case. What I am trying to convey is that everyone is unique. Their risk appetite and their ability to take risk is also unique. Their goals are unique and the roads to approach those goals will also be different. Who will decide on these roads? Who will analyse the risks? Who will choose the ways of approaching these goals? How are you going to achieve these goas and how will you continuously review your performance – this is where you need an advisor.

Suparna Pathak: an advisor is thus in effect like a doctor? Someone who identifies the pulse of the patient to identify the ailment. Now the question is, what is the pulse that you, investment advisors, look for?

Saibal Biswas: Every person’s need for investment is goal or target-dependent. Suppose one is unmarried. Then the question of saving for one’s children’s education does not arise. Even one’s need for insuring one’s life is redundant. As everyone is unique, we have to identify the needs through discussion. The person has to explain his or her needs, what is it that they seek to invest for and identify the goals. And based on that we draw out the charts and chalk out the routes.

Suparna Pathak: What kind of information do you need to arrive at such decisions?

Saibal Biswas: For understanding the risk we run a questionnaire. Where we try to understand how the person behaves when he or she is faced with certain circumstances. This is a part of behavioural economics – we believe that someone who gets easily scared when the market falls should avoid being exposed to equity. Similarly, there are others who may feel that they are not risk averse, people who want to take risks to earn more. They may be provided with higher exposure to equity. From the questionnaire, we identify the ability and willingness to take risks. Suppose we break it down to three categories – conservatives who do not want to take any risks, neutral who can take some amount to risk and aggressive who want the maximum risks to maximise their returns. Based on this we can fit a number to it, and then decide which asset class will best meet these goals.

Suparna Pathak: You mentioned a number. You have talked of this number in past episodes as well, what exactly is this number?

Saibal Biswas: Let me give an example. Suppose one’ son’s current age is 10. At 18, suppose he will go to study engineering. Now suppose the cost of studying engineering today is Rs 20 lakhs. Now in eight years’ time, because of inflation, that Rs 20 lakhs will become Rs 30 lakhs. So, one has created a number – that on a particular year, one will need Rs 30 lakhs. How this figure will be reached is the purpose of both the customer and the advisor helping one.

Suparna Pathak: This means that an investment advisor is the doctor of our finances. Their job is to understand our ability to take risks. Just as should not hide anything from the doctors, similarly one should not hide any material facts from the investment advisors. Their job is to go through your earning ability, spending habits and arrive at your ability to take risks. That is why we suggest that in this complex world to invest right, identify the right investment advisor first.

Stay tuned will we come up with more investment and savings-related questions answers and commentaries in the coming episodes. Post your questions in the description box. Visit our website to access our blog where this and more discussions will be uploaded. Saibal Biswas: Press the bell button for notifications. Write in your comments. Stay with us. Thank you.


An investment Advisor is your financial physician. He helps you remain in the pink of financial health while helping you achieve your investment goals.

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