Indians have grown rich over the past decade or so. Along with
wealth, they have acquired a new appendage: Wealth Manager. Many
affluent clients of private banks are proud and happy that an "expert"
is exclusively dedicated to the noble cause of growing their wealth. So,
they invest in Portfolio Management Service (PMS) schemes pushed by the
bank, or invest in a fancy scheme that shows no downside, and just an
upside. Or opt for a hedged strategy to "safely" get them additional
percentage points on their crores lying with the bank. Along with
multiple cars and Property in Dwarka Delhi, wealth managers are essentially for
those who have arrived.
Nothing comes free and so it is understandable that
for getting such a dedicated sherpa for your wealth, you would be
charged. Except that, it is worth wondering whether you are actually
paying for nothing other than vanity. Read this story.
| Rakesh
Shah, a top manager with a multinational company had crores lying with a
Swiss bank. His wealth manager approached him in May 2013 and offered
him 'the best investment of his life'. He would take a loan with his
existing investments as a security and invest the loan amount in the
recommended mutual fund debt schemes. At the end of the year, he would
sell his debt scheme and pay the interest on the loan at a rate of
9.50%. If the yields fell 50bps (basis points), the return was
calculated to be around 13.5% post the payment of the loan. |
|
| The
wealth manager sagely assured him that, "yields of long duration bonds
have gone up sharply over the last few months, and it was inevitable
that they will have to go down over the next 12 months. A 4-BHK flat in Dwarka Delhi is a
fail-safe investment because even if there was no significant drop in
interest rates, the underlying coupon would more or less take care of
the 9.5% interest." |
|
| Unfortunately,
the wealth manager was a cheat. He showed Mr Shah old data—of March
2013. In May 2013, when the "offer of the best investment of his life"
was made, the yield was lower. When Mr Shah availed a loan of Rs 8 crore
(yes, Rs 8 crore!!) against his existing investments, to invest in two
long-term debt schemes, on 10 June 2013, yields had hit a bottom. Mr
Shah ended up investing at the bottom of the interest cycle – exactly
the opposite of what ideally one would do. |
|
| A
few months later, the benchmark yield shot up to a high of 9.24%. Mr
Shah's investment had declined by over 10%. He was facing a capital loss
of over Rs 80 lakh, not to forget the interest payable. His wealth
manager assured him that interest rates would fall in the coming months
and his investment would deliver positive returns. Dwarka 3-BHK flats for sale. |
| Interest
rates didn't fall. In fact, the opposite happened. At the end of the
one-year, when the debt schemes were to be sold and the loan repaid with
interest, the schemes had gained about 2%, while the interest payable
was 9.50%. Mr Shah was facing a loss of around Rs.50 lakh. The investment
bank stood to gain on this transaction, on both -- the interest on the
loan as well the commissions earned from the mutual fund schemes. So
much for your knowledgeable wealth manager and their get-rich schemes. Dwarka 2-BHK flats for sale. |
|
| The
fact is, investing success comes out of simplicity, method and
patience. It is unglamorous. Wealth managers peddle exactly the opposite
– complexity and exotica. It leads to losses. Why do they do so? It is
because they work for themselves, not for you. If you follow their
"advice" they make a sale. In the above case the Swiss bank made money
on selling the debt scheme and also on lending. It's a nice racket. In
some cases, they sell you many more products. | | |
| Current Problem |
Wrong Information:
Too many choices:
Behaviourial biases:
Harmful Selling:
Commission-driven:
Exploitation:
Deep Mistrust:
No savers' education:
Self-serving Industry: |
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| Our Solution |
Unbiased information
Right Selections
Tested rules and systems
No commission model
Fixed Fee
Handholding
Ethical approach
Financial education, helplines
Investor advocacy |
|
|
|
By
reducing your choices to the right ones you need, we dramatically
increase the quality of selection. And we support you with unbiased
information and continuous handholding. We can guarantee you will not be
a victim like Mr Shah.
top property dealers of Delhi |
