It’s not a bitter gourd, it’s a tomato. But it is green, oblong and has warts. And yes, it is bitter.

That’s the joke being played on the Financial Advisory profession. See if this sounds familiar. “We are not sales people; we are experienced and qualified advisors. Ok, now where do you want to invest?”

How would you rate a highly qualified doctor, with many years in the profession, who always agrees with you, calls you to discuss the various medicines available in the market and is primarily interested in finding out which medicine you would most readily consume? The hallmark of a good advisor, whether she is a doctor (Medical Advice), Solicitor (Legal Advice) or a Financial Advisor, is that she specifically does none of the above.

Even more importantly, what drives her thinking is not selling more medicines, suing more people or having larger assets to manage. What drives her is the need to help solve the problems of her patients or clients, and if that means doing nothing, she would gladly prescribe even that.

She does not have the time entertaining them with what is new, because she is focussed on what’s essential – their health, their protection or their financial well-being, as the case maybe.

If we are genuinely interested in the economic well-being of individuals in our society, we need to appreciate the key quality of a good financial advisor i.e. her ability to think independently. Independent of the story repeated multiple times on the media, independent of how the stock market is moving and, most most most importantly, independent of how the client is thinking or the answer that would please the client.

While the profession needs to lead by example, the responsibility of recognizing as well as understanding the importance of independent thinking, lies with all four constituents-

  • The Profession, by sticking to the standards;
  • The Consumer, by looking for independence rather than fancy name plates;
  • The Media, by respecting the difference between sales talk and competent advice &
  • The Regulator, by understanding that the advisory profession, is probably the only regulated entity who is really on their side of the table when it comes to protecting the interest of the consumer.

As we said in our previous newsletter (May 1, 2021), Experience and Qualifications are good to have, but without the ability to think independently, a rare yet essential quality, all we will have is seductive sales talk in the garb of financial advice, not competent Financial Advice.

- Devang Shah
June 01, 2021

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