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Amit Trivedi, Karmayog
Knowledge Academy, went for a jungle safari recently and realized that given
the similarities between the jungle and financial markets, advisors can learn a
trick or two.
 A jungle safari is a great
adventure for those who come from cities. Earlier this week, we also went for one. This
sanctuary in the Himalayan foothills is known to be home to a few endangered
and rare species of animals and birds.
As is the practice, we hired a guide for
the jungle safari. Before hiring the guide, we asked him the charges and sought
assurances on what we could expect in return. We asked him what all would he
show us.
And his answer is something all advisors
can learn from. He said, “Sir, it’s a jungle. We will show you what is
possible.” No tall claims, no big promises. He gave us the plain straight truth
– the best way to manage expectations.
We did not see any animals. But the
route he took us through was an experience in itself. After a while, the
weather turned and clouds built up. It started to drizzle. There was no chance
of being able to see any birds or animals. Can we blame the guide for the
change in weather?
Compare this to the financial advisor’s
business. Very often, financial advisors build expectations, which though well
intended may be unrealistic. Many investors take it for granted that because
one has hired a financial advisor; one will see only positive and high returns
with no risk whatsoever. Many times, the investors assume such things even when
the advisor may not have promised such things. It is important to ensure you
clarify right in the beginning.
Then, what is the point in hiring an
expert?
The guide knows the various routes. You
do not. The guide will ensure you reach back. On your own, you may lose your
way in the jungle. The financial advisor is supposed to know the behavior of
the market and help the investors ride out the storms.
The jungle is neutral. It does not care
how much money you paid to the guide. It is oblivious to your name, title,
position, or popularity. You may spot an animal, or you may not. The
probability of a CEO being able to see an animal is exactly the same as that
of say the office boy. The jungle is neutral. You have to follow the rules of
the jungle. So are financial markets. The market does not care about your
position or title or even the size of your pocket.
The financial market is also like a
jungle. It is neutral. It does not care how much money you start with or it
does not care what your educational qualifications are. You have to follow the
rules of the financial market. And some most basic rules are, “buy low, sell
high”; “plan well and stay the course”; “do your independent research instead
of following the crowd”. So simple to state but so difficult to follow.
It is the guide, who is supposed to help
you navigate through the jungle. Whether you spot a big cat or not, the guide
can only play a small role. Whether you will get a ten-bagger opportunity or
not, the financial advisor can only help you be in a position to benefit if the
opportunity arrives.
And like we cannot blame the guide for
the change in weather, one cannot blame an advisor if the economy turns bad. The
guide has to help you ensure that you were prepared enough to take care of the
unforeseen situations.
The financial advisor’s role is akin to
that of the guide in the jungle. One has to know what all can go wrong and help
the clients prepare for the unforeseen events. At the same time, the financial
advisor positions the client portfolio in a way that it can profit from the
opportunities.
As someone has said, “You cannot direct
the winds, but you can adjust the sails.” The financial advisor helps build a
boat and then adjust the sails.
Remember, the jungle is neutral. And, so
are the financial markets.
The views expressed here are solely of the author. He can be reached at amit@karmayog-knowledge.com
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