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22 May, 2024 10:53 IST

Money is a means to an end, not the end: Ajay Goenka

Source: IRIS (27 August 2009)

Money is a means to an end, not the end: Ajay Goenka
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Wondering if a visit to a financial planner will be beneficial for you? In this interview with Ajay Goenka, a CFP, Pooja Chopra of explores the business of financial planning and how investors can use it to their advantage.

> For those people who don`t know, what do financial advisors do? Why would someone need to hire one?
A financial advisor is the one who has a relationship with his clients that is far more than just transactional. He has a problem-solving relationship including advice and solutions in areas that have absolutely nothing to do with a product sale. In India, financial advisors are recognized only as sales agents. The community of financial advisors must come and contribute to make people aware about our role and responsibilities. People have a tendency to ignore their financial needs till the time they actually arise. Proper financial planning ensures that an individual, at every stage, has sufficient funds to meet all his financial needs.

> What do you feel is the biggest mistake people make regarding money management, and how can they be corrected?
It is important for people to realize that money is a means to an end, not the end. They spend in advance for future income, which is uncertain. One should correct this mistake by making the cash budget of the family. First, one should spend for the necessities in life and then go for some savings and investments. They should take calculated risk rather than taking speculative risk in the market. Creation of wealth is a process.

> The Madoff and Satyam scandals have snared even the most sophisticated investors. How would you suggest a common investor ensure that their accounts are protected and not invested in dubious instruments?
Investors should try to find a structured and transparent investment methodology. But, I don`t know why we are shifting government`s responsibility on the shoulder of the investor. It`s the responsibility of the government to ensure that all the provisions of the law are complied with. If there is good corporate governance and the actions against the law breaker are fast and strong then scandals such as the Satyam will not repeat in the future.

> What is your take on current market situation? How do you see the market going forward?
It is my opinion that the markets may skyrocket to new highs in the month of September. But before this, I expect some profit booking at higher levels too. Nifty is likely to cross 5200 levels in September and will remain range-bound. Specific stocks will continue to outperform the market. I believe that every price dip presents an opportunity to buy in the coming month. Major action will be seen in small and mid cap stocks.

> Do you feel that is important for someone to be passionate about your profession to be successful?
Absolutely, I feel that it is very important for every person to be passionate about their profession to be successful. I am not only passionate about my profession but I also consider my profession my world.

> Finally, a lot of blame has been put on the financial advisors for losing a lot of their customers` wealth in the financial meltdown. What are your thoughts on this?
For financial advisors and their clients, the world has been turned upside-down. Many clients facing serious financial hits on their life savings are starting to wonder how much they can really trust their financial advisor. Markets always move on sentiments so investors should keep the expected loss/return in their minds. You can not possibly be serious to blame financial advisors for the loss of capital you pay. You are disclosed all of this before you sign the dotted line.

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