The best advisor

Some people like to figure out things for themselves, and some people prefer to ask for guidance and help. There's nothing that brings out the contrast between the two than trying to find a way to get to someplace you haven't been before. There are people who use maps and smartphones and figure it out for themselves. Even before smartphones came in, some people would mostly work out routes for themselves. Others, in sharp contrast, like to ask the way from people along the way. To reassure themselves, they ask at every corner because, who knows, maybe someone is trying to fool them.

Maps and guides
Mutual fund investors are exactly like this. Some are highly motivated, self-driven, do-it-yourselfers. Others need an advisor or at least some kind of intermediary. Before SEBI mandated the direct fund model, you had to pay for this intermediary compulsorily until a few years ago. As it has happened, in the decade or so that the mutual fund regulator has forced all funds to offer a direct-to-the-customer option, most well-informed investors have understood the advantage of direct funds. All funds have a 'direct from the manufacturer' model, whereby investors can get a 'direct' equivalent of each fund. These are cheaper because the mutual fund company deducts lower expenses since it does not have to pay the 'retailer'. Thus, cheaper translates into higher returns. How much higher are the returns from direct funds? A small amount annually but with compounding over the years, it builds up.

There are few investors who do not understand this now. In the pre-digital days, intermediaries were needed to take your cheque and fill out your form and then go to the registrar's office to deposit them. Now, we have net banking and digital transactions, which can do the job much better, quicker and cheaper. So, is that it, then? Will every investor eventually just do it all themselves?

Well, yes and no. Undoubtedly, the mechanical, procedural part of investing does not need an intermediary. However, an advisor, a genuine advisor, is a very different thing.

To understand what we mean, let's first see what the ideal role of an advisor could be. In a list created by an old American financial company, here's what an advisor should be doing:

• Trust or credibility: That is unless you trust the advisor, nothing else will work.
• Goal planning: Asking you about your life and, based on your inputs, creating financial goals that you need to achieve.
• Portfolio construction: Construct an investment portfolio that can be expected to achieve what you need.
• Portfolio rebalancing: As time goes by and different parts of that portfolio have different performance, they have to be rebalanced.
• Ongoing goal evaluation and adjustments: Your life will evolve and your goals will evolve with them. To keep pace with all this, everything above will have to be adjusted once in a while.
• Being a counsellor! When markets are volatile, everyone needs some reassurance that they are on the right track. Being a friend, philosopher and guide is the most important part of being an advisor.

Even though this entire set sounds like a tall order, most investors need some subset of these services, with most needing all. So, how will you find an advisor who will deliver all these services? I'm sure that realistically, we all know that finding such an efficient, competent and trustworthy service provider in Indian financial services is, to put it mildly, a somewhat unlikely proposition.

However, such an advisor does exist and you already know how to find him/her. All you have to do is stand in front of the mirror!

The advisor in the mirror
What? How can you be your own advisor? Surely, the whole point of needing an advisor is that you, the investor, need someone else to guide you. Well, yes and no.

There are two parts to being an advisor:

• Knowledge of investments and the skill and processes to implement that knowledge.
• Complete commitment to the investor, the complete trust of the investor and a deep awareness of what the investor needs.

Who better to supply all these things than the investor himself? But where does part one come from? As we often say, that's where Value Research comes in. To guide you through part one, Value Research Premium has a set of invaluable tools, by far the best that any Indian mutual fund investor would have access to. Here's a brief description of some of what you will get:

Portfolio Planner: These are custom portfolios that are suggested to you as part of your Premium membership. The algorithm that we have evolved takes into account your goals, income, saving capacity and a number of other factors.

Analysts' Choice: Often, investors want to choose their funds for some particular investment purpose. There are about 1,500 available to you, and even with the help of our rating system, it's a lot of work to zoom in to the right set. However, that won't be a problem for you because, as a Premium member, you will have access to Analyst's Choice. Instead of the 37 official types of funds, we have created eight investor-oriented categories which match precisely with the actual financial goals that you have. In each of these, our analysts have carefully selected a handful of funds to serve you with the best outcomes.

Portfolio Analysis: Only a few members are starting their investing from scratch. For most of you, a big question is whether your existing investments fit into your goals. This is often a hard question to answer because there are a lot of implications of switching old investments, not the least of which is taxation. In the Premium system, you can get an evaluation and a suggested fix list based on our expert teams' inputs.

There's a lot more to Premium, of course. So, head over to Value Research Premium, read more details of these features, see glimpses of what Premium has to offer, read testimonials of our members and subscribe at a discount of up to 30 per cent.