What’s The Latest?

Amar Pandit , CFA , CFP

A funny incident happened last week as I was speaking with a few of my cousins… One of them (a doctor) said, “Thanks to your colleague, I was able to buy a property in Dadar. The best part is we bought it way before we thought we would be able to. It’s so important to have the right professional in our lives. I don’t think we could have done it without her. I can’t thank you all enough. We had no clue about investing and where to begin.”

As we were discussing this, another cousin joined us. Can you imagine the first question he asked?

“What’s the latest in mutual funds? Which is the best one?”

I told him, “Have you ever asked a medical professional (a doctor)- “What’s the latest in treatments? Or Which are the best-selling medicines?”

He said, “Never…Who does that?”

I asked, “Why would you say that…Why wouldn’t you ask a doctor for the latest medicines or best-selling ones?”

My cousin patiently responded, “Because when I go to a doctor, I will first talk about my problem and my situation. I expect her to diagnose me thoroughly. Unless she understands my problem or what’s wrong with me physically, how can she tell me which medicine/treatment I should go for? And how does it matter what’s selling well? What has that got to do with my situation? What’s important is that I get the right medicine/treatment for my problem/situation. Did you get it?”

‘Thank you for explaining this’, I said… “I totally understand why you wouldn’t do this when it comes to your health, but I still don’t understand why you would do this with your financial life?”

He seemed confused, “What do you mean, Amar?”

 I then told him “Didn’t you just ask me for the latest financial medicine even before I could understand your situation or what you were really trying to do with your money. You didn’t expect any diagnosis…You simply wanted a prescription…You simply wanted to know what was selling the most…You simply wanted to know the product with the highest returns…”

This seemed like an AHA moment for my cousin Milind (name changed).

“I see what you are telling me…I never thought of it that way…The people I hang out with mostly speak this language…We have never been taught any other way…I thought this was the only way to do it…But now that you made me think, what I have been doing seems backward and even stupid.




Every person/family is different…Even our basic needs depend on the lifestyle we live…Thus, we all have unique life situations depending on our income, expenses, assets, liabilities, the number of our family members, their ages, their aspirations, their objectives, their emotions, their behaviour, and many other things. Therefore, there is no single solution for all of us…Best-selling mutual funds/investments don’t mean anything in themselves…They must be right for our financial situation…They must be right for our needs … They must be right for our financial lives…And the only way to find out if something is right for us is by ensuring that we are thoroughly diagnosed…Therefore you must not seek treatments/products/prescriptions…You must seek to be thoroughly diagnosed (I know I repeated this line but it’s so important that I wanted to write it again and again and again).

The job of a real financial professional is to successfully diagnose the problem, first and foremost. Only then is it appropriate to offer products.

But many in the financial services industry almost always start with prescriptions. They know the treatment even before they have diagnosed someone’s situation thoroughly. They are specialists in prescriptions and treatments without a diagnosis.

The best part is many investors act like my cousin Milind. They also don’t expect to be diagnosed thoroughly. They want the prescriptions and a treatment plan now. They want the high-flying prescriptions that their friends have got. They want the best-selling stuff. They miss the point that their financial situation (and financial lives) might be different than that of their friends.

But investors are not to be blamed for this. Our industry spends billions to market and sell these best-selling financial products. And this is the only way financial services have been sold (up until a few decades ago). Therefore, this approach has become a part of most investor’s consciousness and subconsciousness. Investors expect their financial professionals to hand over prescriptions and best-selling stuff in the first encounter.

But world class professionals don’t talk about products without thoroughly diagnosing their clients…They are not looking to sell products or simply sell something…They care for their client’s financial well-being.

I have seen families having several treatment plans (from 6 different people) and 50+ prescriptions. And they believe they are getting to pick the brains of 6 people. They believe they are getting the best products. This is nothing but insanity. Like 6 brain surgeons working on your brains doing 6 different things. Or like a Brain Surgeon and Heart Surgeon operating separately without caring what the other is doing and the impact of this on your life.

Coming back to the point, I cannot emphasize enough the importance of a thorough diagnosis.

If you don’t get this step right, 4 things can happen –

  • No Treatment
  • Under Treatment
  • Over Treatment
  • Wrong Treatment

Thus, getting the diagnosis right is a matter of life and death.

Let me repeat it again by changing a few words here and there – Getting the right/wrong diagnosis can be the difference between life and death. The same is true when it comes to investing. It is a matter of your financial life.

While you are not a patient in the context of investing and while the diagnosis might not be so fatal initially (in many cases it absolutely is) when it comes to your money, getting your diagnosis right is the first and most important step. It’s critical to your financial life, your financial well-being, and your peace of mind. Not getting this right is the number one reason why there are so many missing millionaires and billionaires on this earth.