wealthforumtv

Anandbir Singh discusses the importance of helping investors understand the real risks in investing. Risk can be defined as either the loss of capital or the loss of purchasing power - the former is very visible, the latter is far more important but much less visible. He explains that they handle clients by lowering their expectations as they operate by the mantra “Under-commit and Over-deliver”. They show clients historical data, highlighting the worst phases and the subsequent turnaround to both caution clients of risks involved as well as ensure to not get them too afraid.
When discussing how they discharge responsibility while managing excitement levels of an investor, he points out that clients tend to be most jittery when markets are down or when debt funds aren’t performing well, which makes it vital for advisors to be available 24/7 and for them to meet their clients regularly. He points out that communication is key and that it is essential to explain why certain things are happening when the markets are down and show them an outlook ahead.
Talking about switching funds, he says it is only required under two circumstances:
(1) If there is something fundamentally wrong with the fund, that is, if it has been underperforming the benchmark for a while
(2) If a fund changes completely in its overall positioning
When asked when he thinks Asset Allocation re-balancing is required, he says it is most essential when a client’s goal is nearing wherein there are gradual withdrawals to ensure liquidity to meet a specific goal such as buying a house. “It is a crime to plan to live too long or too short” he says as he stresses the importance of preserving purchasing power of a corpus”