How I Got Started
5 years ago, I got some liquidity. ESOPs realised from a startup I was working with.
I had no clue what to do. My parents knew only about land, gold and FDs. We used to stay away from the share market.
My wife suggested I speak with friends who might have more experience. So I did. And this is how I came across my current wealth manager, in March 2021.
I am not very money-savvy. And I was much worse then. So I did not know what questions to ask. But after a few long, 1-hour conversations, we decided to go ahead with him.
Five Years Later
5 years later, it has been one of the best money decisions I have taken.
Since then, I have invested in PMS, direct stocks, and tried dozens of investment products. Some might be giving better net returns on screen. But money is more than returns %. It brings stress.
The best money decisions, for me, are those which include good returns and the least stress. Wealth management was that for me.
How We Started
We started with some lump sum and some SIPs. And gradually kept growing.
The first 2 years were rough. The Indian market was going through a major correction. And my screen showed -5% after 2 years.
I was in the mood to stop the SIPs. My wife jumped in again. While I did reduce my SIP amount, she did not.
Since then, I have not been able to increase my SIP. That is a strong lesson. Momentum is difficult to break. If you can manage, keep the SIP strong.
What Exactly Does Your Wealth Manager Do That You Couldn’t Reasonably Do Yourself?
Nothing. And that’s the beauty of it.
We try to do too much. While trading requires a high amount of active involvement and quick, smart decisions, investing is different. The biggest thing needed is patience. Most people fail here.
My wealth manager says this clearly. There is so much information on the web that anybody with a computer or mobile and an active internet connection can do decent research in a matter of days. On which fund to invest in. Why to invest. The trick is to stay invested.
His job is to keep on telling us it’s okay. And this will pass.
While this sounds like an easy job, it’s not. People get nervous around money.
Then there is the personal angle. I am not very disciplined or reliable. In money, these can lead to disasters.
My wealth manager’s job is to be disciplined and reliable. When I need money, I myself have less clue of where all I have invested. But he has an account of every penny.
In a crisis, which is what investing is mostly about, this matters.
Money, Returns and Happiness
They say bad decisions eat up your savings. That is true.
But bad decisions also eat up your life.
Savings and investments are important. But they cannot eat into your happiness.
I tend to lose on that notion, but it is important to remember.
Where Things Stand Today
As of today, the Indian market is going through one of its worst patches. 2 years of flat returns, and the future looks bleak as well (at least to me).
I think the world is going through a major shift. India is not at a very strong position. It is at a position where good work will have very good effects, while bad work (in the next 5 years) might destroy the next 20–30 years.
And the stock market is in much-needed correction.
Despite all this, my investments are currently around 11–12%. In the last 2 years, 11–12% has been seen as poor returns.
I am very happy with this.
The Argument About Fees
One of the biggest arguments against wealth managers & MFDs is their fee. I think this argument is idiotic.
You have to see what you get from the service.
As I opened, we came from a world of FDs. 12% return from a 7% world is a big leap.
Yes, there are people who might be getting 16–17%. Good for them.
Maybe in the next decade, as I grow wiser and money-smarter, I might want to target that. But not today.
My focus is that he got me from 7% to 12%.
Whether he is making 1% or 10% is a different question. At one point, I agree it does get important to answer. (Although, this cost justifies even more when the corpus is higher or the returns are higher, that is, almost in every case.)
But at the first stage, you have to look at what you get.
How Much Did You Pay in Fees, as a Percentage of Your Investments or Returns?
Continuing in the fee part.
Also, the fee deduction is pretty seamless. You don’t get to see or feel it. Whatever you see on your screen is the net amount that is yours. Only the government will take tax from it.
The MFD commission cut etc. have been taken care of in the backend.
This makes it easier.
To put a number on it — the fee varies from fund to fund, but on average, it works out to about 1% of the overall corpus per year.
So if my corpus was 1 crore in 2021, the fee that year was 1% of 1 crore, which is 1 lakh.
If my corpus grows to 10 crore by 2030, the fee that year will be 1% of 10 crore, that is 10 lakh (per year).
This is why the fee conversation changes as the corpus grows. At 1 lakh a year, it feels negligible next to the returns. At 10 lakh a year, it starts to feel like real money — even if the percentage hasn’t moved. That is the point I made earlier: the fee question matters more as the corpus or the returns get bigger.
How Did You Actually Vet and Choose This Wealth Manager?
I spoke to 3–4 different wealth managers. All of them big names.
While my current wealth manager did not say something that would make me inclined towards him, I found multiple red flags in other options I was exploring.
Some of them were unrealistic, big claims, a rush to convert the client rather than understanding what I actually wanted. And 1 was outright cold.
My current MFD seemed to be saying all the basics in the right amount. No big claims, available every time I called (which is true even today after 5 years).
And one of the biggest factors was that 8–10 of my college seniors were invested with him. That helped a lot as well. (Remember I said I was not very money-smart. So I just jumped on the wagon with some of the smart ones I knew.)
What’s Your Actual Asset Allocation?
This does not mean that MFD manages all of our wealth.
While confidence grew with him, after 1 or 2 years, my parents also started investing with him.
As of now, of our family’s total investible corpus, 40% is being managed by him (primarily equity).
The rest are FDs, gold and debt MFs.
We backcheck these once or twice a year with him. And he is happy to advise.
But these don’t fall under his purview of management.
In What Case Do I Think I, or People, Would Not Need an MFD or Wealth Manager?
If you are a professional. No other case.
If you have a full-time job, you should let professionals manage your money.
You can diversify, that is completely fine. You can have 2 or 10 different managers based on your corpus.
But unless you are a financial professional, I would not do this myself.
Even if you are a hobbyist, my recommendation would be to start managing 10% of your corpus for some time (preferably 1 or 2 up-down cycles).
Once you have confidence that you can navigate the market cycles without losing your sleep, you keep on taking out some % gradually till you own the entire thing.
But my bet would be that you will stop midway.
You can put that time to better use. Earn more or live more or do this full-time — that is, if this makes enough money to replace your job.
Knowing What You Know Today, Would You Choose the Same Wealth Manager Again?
In a heartbeat. No doubt.
In the last 5 years, I have seen a lot of people do this themselves. While it looks great when the market is up, they all bleed in corrections.
And it is not just the part allocated to the equity markets.
A good wealth manager, advisor, MFD will help you allocate better to all assets. At least mine does. And that keeps things in a greater balance.
When bad cycles hit, you are comfortable.
When good cycles hit, you flourish.
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