Sunanda Verma represents a large segment of well-paid professionals, which does not have the time to manage its money affairs. Verma needs an adviser, who can take care of her finances, but before she engages someone, she should be clear about the mandate and terms on which she wants her money to be managed. First, Verma needs to collect all the information about her investments. Since she has not paid attention, her investments may be lying in multiple folios and accounts. She should get her adviser to draft a letter to all her mutual funds, banks, registrars, brokers and depository participants, seeking information about her holdings. This can be done even if she does not remember her folio numbers.
Second, she must consolidate her portfolio and review it. The adviser should tabulate all the information that has been sought and plug the required details. He should then assess the portfolio for its current value, compute the return earned, and summarise how each investment is faring. A review should enable Verma to decide what to keep, what to close, and what to consolidate. Third, with all the details in hand and having estimated the current value of the investment portfolio, she should sit with her adviser to decide how it will be managed in the future. The adviser can take a detailed financial planning approach or he may choose a wealth creation approach, which is based on an agreed return at an acceptable level of risk. The payment to the adviser should be based on mutually accepted terms, and subject to completing the paperwork and processes, and reviewing the portfolio. Verma should also play fair by not dropping him after the processes are completed. She may then find herself in the same financial mess after a few years.
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.)
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