October 13, 2020

Personal Finance Professionals are extremely underpriced: The Apple connection

Jinay Savla
Partner, Circle Wealth Advisors

If you’re an Apple fan, then September 15, 2020 would have been one of the coolest things that has happened this year amidst the Coronavirus crisis. The company just continues to surprise us. At 10:30 pm IST Tim Cook went live to showcase their upcoming products for the year. Apple Watch, iPad and the highly advanced A12 chip. Steve Jobs would definitely be smiling from heaven looking at the new $5 billion campus and an amazing advancement in the products. A12 chip is 40% faster than A11 chip. It’s the fastest processing chip ever. So expect the new Apple machines to run super-fast, as if they weren’t fast enough.

Watch the event here – Apple Event

Warren Buffett, World’s Wealthiest Investor and his firm Berkshire Hathaway owns a majority stake in Apple explained that he loves this investment due to the power of its brand and ecosystem.

Last year, in an interview with CNBC he said, “I do not focus on the sales in the next quarter or the next year,” he said. “I focus on the … hundreds, hundreds, hundreds millions of people who practically live their lives by it [iPhone].”

To everyone’s surprise he also called the iPhone “enormously underpriced,” saying that it’s worth far more than the $1,000 Apple charges. Here in India, we joke about selling a certain body part to be able to afford the phone.

“I have a plane that costs me a lot, a million dollars a year or something of the sort. If I used the iPhone — I use an iPad a lot — if I used the iPhone like all my friends do, I would rather give up the plane,” Buffet said.

That definitely comes as a surprise. Warren Buffet saying iPhone is underpriced and is so powerful that he would rather give up his plane. Yet, when the Oracle of Omaha says it, we should give it a thought from another angle. Apple is not just disrupting the phone industry as such, it has done that long ago. It’s now disrupting the healthcare industry. Its watch can now track your blood oxygen level too. That’s just huge.

Healthcare that has now become extremely data driven is well understood by Apple and this gives the company an edge in making a world class product. When it comes to iPad (I use it close to 6 hours a day and am completely addicted to it), reading, note taking, reproducing the notes when needed for communication, movies, music and so much more. I can say for certainty that Buffet is right and Apple products are enormously underpriced.

I can go on and on about Apple here. So let me share with you a perspective on how I view us- Wealth Managers/Financial Planners/RIAs/MFDs/Personal Finance Professionals and why we are extremely underpriced. The motive behind this article is to enable you, dear readers to first understand your true worth and the value add that you bring to the table. Its only then, that you can use this conviction to make clients-both existing and potential, understand why they need you and why a “DIY approach” is much easier said than done.

Ask your clients/prospects these questions and use the explanation elaborated underneath to make them see what difference you truly make in their lives:

Let’s start with a few basic questions first.

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Q) If you want to buy some shares in a company. Who do you call?

Of course, your broker. The one who sits in front of the trading screen every single day from 9:15 am to 3:30 pm. So you feel, he knows everything. And he is super smart too, when you call him and say. ‘give me some investment ideas as I have some money with me’, he will give you a plethora of ideas with stop losses and target price.

If you ask him – WHY then he has an answer too. Because results are going to be fantastic or there is some insider or privileged information that he has that market doesn’t have. That sales pitch makes absolute sense and you run to them with your money.

Q) Secondly, you want to buy insurance. Who do you call?

A Life Insurance agent walks through your door. He shows you some papers and says, trust me sir, your money will double in the next 25 years if you invest consistently for the next 20 years or so. Trust is inbuilt because, come on its Life Insurance.

So now you do a quick mental math and say after 25 years I will have a few lakhs in my account. Wow! And this Life Insurance agent is a relative or relative of a relative. So no worries, let’s roll. Plus, we have to attend a part tonight so let’s get the paperwork done quickly.

Q) Going to buy a Car. What about its insurance?

Salesmen of car companies are extremely trained. They will tell you all the benefits and a ball park number to purchase it. Let’s be honest, nobody is bothered about the insurance. In the first year, we are going to drive carefully and slowly. So there won’t be any accident. So why worry or think about it. We’re just thinking about that drive to Ladakh and back.

So we tell him, okay let’s do it.

Q) Car loan?

Car salesmen are pretty smart here too. They will come out with different plans and sit with you through the process. Rates are competitive. And while you’re thinking about that drive to Ladakh, getting into the mess of understanding loan structure is tiresome.

So you calculate your salary minus EMI of the car loan and after all other expenses there is still money left to enjoy. You sign the papers and the EMI meter starts running.

Q) Buying a home via a home loan?

The same drill. Monthly in-hand minus home loan expenses and all other expenses. If yes, then buy, if no then other. Most of us don’t understand the process, because come on, we aren’t from the finance industry or a commerce background. Plus, we really need this home so it’s a tiresome to look for the devil into its details.

Q) And what happens when a Wealth Manager/Financial Planner/RIA/MFD/Personal Finance Professional turns up-to your door?

The first question you shouldn’t ask is, where will you invest my money? Just because you already have a broker and someone from your family is a CA who looks at CNBC all day long having the best knowledge of which stock will work in next week.

When the conversation turns to financial planning, basically you want to say that there’s no real need. Why? Because you lead such simple lives, come on. You might just have 2 cars and loans on them while your neighbor might have 4 cars, one of which is a BMW – can you imagine. So basically, we are extremely simple. Simplicity is intangible and dangerous when it’s someone else’s lifestyle is a benchmark.

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This kind of a conversation, of course in a tone that fits the narrative and the sensibilities, can stoke relevant thoughts and relatability in their minds. Wealth Managers/Financial Planners/RIAs/MFDs/Personal Finance Professionals cannot be expected to just give investment ideas to make people rich overnight. Clients almost get dismayed that we tell them that it is better to get rich slowly and enjoy the powers of compounding.

With such a conversation, a Wealth Manager/Financial Planner/RIA/MFD/Personal Finance Professional sounds expensive.

“He doesn’t make money immediately, plus he will cap my expenses and on the top of it, he will invest in mutual funds. Come on, my broker knows how bad these mutual funds are and they eat up so much money in expenses. So let’s go into direct plans and try to do it yourself rather than paying them.”

How many times have we got such responses and feelers from clients/prospects?

Okay, so I may have not captured enough or may have gone overboard in my perspective. But dear readers, I hope you get the picture somehow.

Now, lets share with our prospects and clients a little secret that only the incredibly wealthy people know. Your clients will be excited to hear the “insider” information from the world of the wealthy.

The secret is – a Wealth Manager/Financial Planner/RIA/MFD/Personal Finance Professional can do the work of broker, insurance agent, loan agents and bankers much more efficiently. He becomes the  single point of contact for a client. Like a Personal Chief Financial Officer.

They do everything for the client . They look into the nitty gritty of every detail in their clients’ financial life.

Now think about talking to your client about it this way!

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You just have one person reporting to you every quarter about what’s happened with your money. Plus, if there is any new deal (home / car / bike / vacation), they are  there to look into the tiniest details for you and then suggest the best alternative. While you still retain the power to make decisions. But that person does all the calculation for you while you are spending most of your time and office and with family.

Consider, you can attend your children’s school events without having to worry about money. Or you can send them abroad to study without any second thought of where that money will come from. Marriage expenses also get covered without you having to worry.

At the same time, you are able to move into a bigger house in a good neighborhood. A better car and international vacations. While your children give their best performance at school because you are able to give them enough time.

Plus, someone who takes care of your retirement too. So you’re working right now and want to work for few decades more. In the meanwhile, there will be marriage, kids – education + marriage and still you will be able to live a life post retirement with more luxury than the one you started with.

You might as well launch your own startup and not having to worry about money, you’re focused 100% on making the startup successful. What’s your chances of being successful? I bet a lot more if you had to worry about money at home all the time.

Would that be enough?

Would you like to pay for it? If yes, then how much?

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Trust me, this conversation will instantly help boost your conversion rates and make your clients appreciate your services and expertise. Have you had any similar experiences? Please share them with us in the comments below.


3 Thoughts to “Personal Finance Professionals are extremely underpriced: The Apple connection”

  1. Avatar Biswajit Majumdar, CFP says:

    I am very interested network FT training

  2. Avatar Vidyanand Thakurdesai says:

    Bang on Jinay Salva can’t agree with you more. Definitely going to share this with my clients.

  3. Avatar Yuvaraj says:

    In this article the author has portrayed negatively about stock brokers, insurance agents, car salesmans, auto loan executives. As if only Wealth Manager/Financial Planner/RIA/MFD/Personal Finance Professional are come from the heaven. While writing article first we have to respect every profession and professionals.

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