The best advisor

Many investors need some sort of financial help to achieve their goals. Fortunately, you already know the advisor who can help you out.

- DHIRENDRA KUMAR

Some people like to figure out things for themselves, and some people prefer to ask for guidance and help. There's nothing that brings out the contrast between the two than trying to find a way to get to someplace you haven't been before. There are people who use maps and smartphones and figure it out for themselves. Even before smartphones came in, some people would mostly work out routes for themselves. Others, in sharp contrast, like to ask the way from people along the way. To reassure themselves, they ask at every corner because, who knows, maybe someone is trying to fool them.

MAPS AND GUIDES

Mutual fund investors are exactly like this. Some are highly motivated, self-driven, do-ityourselfers. Others need an advisor or at least some kind of intermediary. Before SEBI mandated the direct fund model, you had to pay for this intermediary compulsorily until a few years ago. As it has happened, in the decade or so that the mutual fund regulator has forced all funds to offer a direct-to-the-customer option, most well-informed investors have understood the advantage of direct funds. All funds have a 'direct from the manufacturer' model, whereby investors can get a 'direct' equivalent of each fund. These are cheaper because the mutual fund company deducts lower expenses since it does not have to pay the retailer'. Thus, cheaper translates into higher returns. How much higher are the returns from direct funds? A small amount annually but with compounding over the years, it builds up.