WHY YOU AS INVESTOR TRUST LESS WHILE DOING INVESTMENT AND YOUR ADVIRSOR? SERIES 1

 

Why you did not become wealthy despite timing the market? Do you know why you being an investor your trust level has become low? Do you know why you as an investor have multiple financial advisors now as compared to earlier? Well, don’t blame the wealth tech and fintech platforms. 

They are just facilitators.  Do know why the asset allocation of you being an investor has gone haywire? In the past 18 months, every investor has become greedy, egoistic in thinking that he is now Fund Manager more importantly the client has developed a thought that just reading a week before the exam one can get 90% or 95% marks in the exam then why one should study for a full year.  In the last 18 months, the 2.40 cr new Demat accounts are the new evolution of clients who have come up to raise the bar of financial advisory.

In the last 18 months, the behavioral aspect of the clients has changed dramatically and this change is now every lasting process which and high speed.   The plain vanilla risk profiling is of no use from henceforth. All financial advisors need to get into behavioral risk profiling to dig deep into the client's constant changes and evolution.  

How many times your financial advisor has taken you through the review of behavioral risk profiling?  The change of behavior towards investment can erupt from any place and anytime influenced by the ecosystem of the individual client. This is a key segment that is being ignored currently and In India, kits are being found that hardly any behavioral risk profiling is being done by any fintech or wealth tech platform.   We don’t find behavioral risk profiling while providing a loan to an investor in order to know how his behavioral aspects have been influenced during pre and post loan sessions. Changing Temptation like dreams and greed are going to decide every investor and the frequency of this change is so fast that most of the investors will land up with losses rather than becoming wealthy.  

Most of the investment decision is done based on influencing the temptation. Do you know that retirement is a dream which is being sold to get investors to inflow into risky assets where without accessing the risk-taking ability of an investor?   

If we look at the current consumption patterns speaks loudly that in the coming years down the line next 5 to 10 years India will face a situation of U.S economy where savings will fall down and any economic downfall will create a contagion impact on the society. Buy Now pay later, P2P lending-based consumption are a few of the mass destruction weapons being sold used, and consumed for instant gratification fulfillment.   Do you know that this Buy Now and pay later is just like the recent euphoria created by White Jar behind children learning to code and becoming all app creators at the of 8 to 12 years?  This type of temptation provokes greed and creates greedy investors who never become wealthy even by spending their whole life being greedy.

 Do you know that behavioral analysis of investment is now growing demand and a rising subject hard to be ignored for investment and asset allocation? The temptation of investments is the key driving force behind any investment decision which is the key behind any investment crisis. Raising the bar of retirement expectation is the simple trick to get investors pulled to investment themes like cryptocurrency or higher rate of interest FD investments

The truth is that Investors are lazy by nature and hence the focus on chasing short-term gains and making quick returns leads to fewer investors becoming wealthy.  This laziness is the key behavioral aspect of the investors which drives all investment decisions and drives following the herd and rejecting one's own objectives of investments. All investor carries the legacy of their parents, friends, and relatives experience towards investments, and hence the behavioral risk profiling becomes eminent.

How many of you all do every year's review of the behavioral risk profiling of the client and review his investment decision rather than focusing blindly on asset allocation and returns gained from the individual asset class.

Temptation is changing the behavioral aspect of every investor and hence his trust is also getting changed hence the investor has multiple financial advisors. We are not doing behavioral-based risk profiling of the client in order to know the changes in the behavior the client has accumulated and hence design the investment portfolio accordingly. Goals will change but we need to know the behavioral aspect behind the changes and the perception behind every penny invested.  The investment objective has been influenced by multiple behavioral changes and the impact is on asset allocation, churning of a portfolio, timing the market of behavior changes, etc all come into play.

 As an Investor, you don’t need only need IQ (Intelligence Quotient ) but also EQ (Emotional Quotient) too to become wealthy. Rising inflation raises the bar of the middle class hence one needs to strategize accordingly for the same.