Many
times following the policy of “Jack of all, Master in none” we undertake
multiple new tasks under our belt to reduce the daily interactions with numerous
people. We want to try the DIY options and let go the hassle of talking to experts
in different fields. We want to try new avenues of self learning and make the
most of newest technology. To share with you one such incident, I spoke to one
of my client asking them to invest in the list of given mutual funds in line
with his goals. He asked me the reason for this allocation, I explained him the
entire allocation thinking that he wanted to understand the given advice. However,
later when he sent me the list of his investment around 50% of the allocation
was made in the similarly mutual fund of my advice but not in the given
proportion. He had taken the liberty of distributing too much dependency in one
particular fund leaving the other one to petty amounts. Of course, when I asked
my client the reason for it, he simply mentioned to me that I have personalized
mutual fund software that devises the portfolio allocation for me based on my
monthly income and fixed goals. I was shocked for a moment not realizing that I
was not able to make my client realize the value of human input over software
output.
Over
years, we have come across many prospects, which were willing to subscribe to
various software packages and applications to help them their personal finances
but not the same with their Personal Financial Advisor. They trust more of
machines over human. It is fine to advocate the error free usage of software
over human interface but there are certain limitations which should not be
ignored. Today we would like to discuss some of the simple things any DIY
investor should check in his personalized advisor tool.
Some
check points
·
Source of data- the software is dependent on human to
add information for the latest investments/ SIPs or even information regarding
the mode for payouts. It could be possible that we may miss out any on
particular entry and not be able to get an accurate output of the investment
valuation. So, it is best to set a fixed time – like particular day, time or
date on which the information is added to the software. This helps to avoid any
lapse in entry to particular investment.
·
Return rates – the future valuation is dependent on
the software fed return rates. If these rates are not to the mark or updated,
the results could be fictitious and unrealistic. So, it is essential to understand
how is the rates is fixed.
·
Investment valuation - most of the software are cloud
based and get automated directly but there are times when a user needs to
update the data. So, please ensure that the software follows the required
methodology.
·
Security parameters- there are usually two levels of
security parameters ensuring that the client data is encrypted. If you are linking
your savings account to the software please take care that your personal data
is not compromised.
·
Reports generated – it is always better to have a bird’s
view of your investment valuation and beyond that give you a recommendation on
your goal achievement.
·
Recommendations and advice- An advice should be customized
in line with your goal and age requirement. It should not be that the particular
investment is adjudged on its individual capacity. Make sure that the entire
investment goes well with your risk appetite and requirements.
·
Timely upgradation – it is better to avoid trial
versions of your preferred software and go in full fledged application for your
use. It will ensure you get all the required features and service.
Software may be good to run algorithms and give results in quick time. However,
what it may not understand is your emotional mental status. It would not be
possible to give you a sound ear on your personal move. It is best to talk to a
human over machines. However, if you are person on go with ease of handling
multiple agendas then it good to crack the DIY code well become plunging into
them.
Thanks and Regards
Team
Saarthi Financial Planner
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Email: saarthifp@gmail.com
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