The Times of India headline on August 10, 2020 – “’How to make COVID vaccine at home’ was the second most searched Google query last month!”

So, people evidently trust the internet to come up with answers to everything.

Two months ago, in June, I wrote about the booming number of demat accounts being opened by retail investors since the global lockdown began. Not just in India but in other countries too.

Another point to ponder – the number of mutual fund investors opting to invest directly, instead of through an advisor, is on the rise.

So, a record surge in demat trading accounts as well as the growing interest in ‘direct’ mutual funds.Now, both of these guys may well be taking inputs from informed sources before making investment decisions. But that seems difficult to believe.

One, because trading in equities requires agility. Two, all mutual funds (and especially the equity type where you would tend to invest and not trade) have the option of ‘regular’ plans wherein the financial advisor/agent provides inputs – but for a fee.

So, I would believe that both these classes of traders/investors act (mostly) on their own advice. There are gigabytes of data and articles that can be googled up for help, right?

The problem with this approach – more so for the direct mutual funds – is that many people will look at just the recent returns. Or momentum investing. Or FOMO (fear of missing out). Or even anonymous tips.

The lure of saving a fraction of the cost – the advisor’s fee - is apparently an irresistible bait.

What is invariably missed out is that returns on equities move in cycles. If a fund has given good returns in the recent past, it may be at the top of its cycle – a fact that is lost upon many DIY (do it yourself) investors. And conversely it takes vision to recognize, and guts to invest in, sectors which are currently not doing well.

The reward, thUS, that one can expect from a good financial advisor is that

• He provides the vision to see and invest beyond what is obvious
• Counsels against selling in a panic, or buying in a hurry
• Provides a sound asset allocation strategy after understanding client requirements. In plain English, he will have assets allocated across equities, debt, commodities like gold, insurance and an emergency fund – according to the client requirement.
• Okay, add one more. Based on experience, most DIY investors in mutual funds will not regularly review their portfolio – till a fund’s return turns unconscionably bad. So, expect regular advice for re-balancing your portfolio as well.

In a nutshell, many investors are concerned with what is obvious and right under their nose – vision seems such a fancy term to most of us – and will invest accordingly. Often, they may make good returns. Whether good returns could have been great returns is something they will never know. And when the returns turn out to be bad, well, it is the poor mutual fund that gets the blame.

It will not matter to most that the most reputed in the world will take months to come up with a COVID vaccine – the recipe for the vaccine must be available on Google, right! Or for that matter, as a colleague caustically remarked – video’s on conducting bypass surgeries are also available on the internet.

Just like good investment advice supposedly is.