A shift is coming in Investing and towards the value of Money

The biggest difficulty of this current market is that a year ago you went to the client and asked for Rs 25 lakhs for investment showing performance and the client gave you Rs 50 lakhs instead. The last 6 months have given significant knowledge to the investors that rebalancing and realignment are two critical components of investing. In my interactions with MFDs, I have found that many of them failed to convince the clients about the fall of the market, keeping the current investments intact and at the same time guiding the clients to rebalance when the market was high in 2024 September.  

It was a surprised when we met many industry veterans and learned that there was no pressure on their faces from the client end related to the market correction, whereas, at the same time, there was another group of MFDs struggling to face clients.

The biggest question is what got wrong and where? Well, the last 4 years' rallies attracted investors to the market and new financial advisors who joined the market based on the rally of the equity market. Now managing clients when one is under a job in another firm and getting converted into MFD are two different aspects.

This has been one of the grey areas where the gap between clients and MFDs has widened. Further, the new MFDSs and those who had Rs 5cr to 10cr AUM in 2019-2020 sold only performance. It’s a bitter truth but when performance is being sold alone then redemption without notice to MFDs is bound to come.

The communication gap widened more due to this performance-based product sale. Past performance made the work easier to garner AUM. Now coming days and years will be different from the client's perspective and from the investment climate. As an investor, the responsibilities towards the investments and investing are now very high. Investors' basic awareness of investing is now an old subject.

Money in the bank isn’t safe. The moment you deposit your money in the bank, you don't truly own it. Your future self is getting poorer by 11% each year due to currency debasement. Houses are no longer a path to wealth. In the past, homes were affordable and provided financial security. Now, they’re “lifestyle banks” not wealth creators. Inflation control is just a gimmick since the climate chapter and syllabus are on no one's list.  Purchasing power will come down and vice versa savings and investing.  Opportunities where small investments can lead to massive returns. Yes, this is a theory that will prove more in the coming days.  On average, your purchasing power declines by 8% yearly. We are not getting this realization that we are becoming poorer

As you read any book on productivity asking for deep focus- similarly for investing and to remain invested you need deep focus. The voice of distraction will be more and hence as an investor you need to be educated and aware of such distractions.  As an investor you now have to pass exams and also MFDs need to come up with exams for getting the clients qualified to be a client of you. Yes, the coming times demand behavioural analysis of investors and repetitive analysis of the same and not a one-time affair.  The generation of 2000’s birth and post don’t know much about GFC and other stuff and hence education on the history is more important rather than performance-based product sales. Clients' deep focus towards financial objectives needs to be tested yearly to gauge the influence of distractions.  In short, a seismic shift is coming and money and investing will change forever.  Be ready now or get ready in time.