It has been a month since we launched the long-awaited Value Research Premium service. Of course, as I wrote last month, the service has long been in planning and then execution and has seen its features evolve at the conceptual stage as well as in the months that it was in internal use.
From the beginning, there have been two competing visions of Value Research Premium. One, an enhanced version of the normal, free-to-use Value Research Online service. Two, an alternative to the conventional way of choosing an investment, whereby an automated, algorithmic system provides the equivalent utility to what an ideal fund advisor does. Note that in the second case, it is not the same thing as advice but something that is of equivalent utility.
So how does this work? How can something be of an equivalent utility to actual advice. The difference is you. The conventional framework is assumed to work regardless of how little the saver knows about investing. The person across the table does the whole job. Even if the saver knows nothing, it's supposed to work. Of course, the reality is different, as we all know very well. The way things work in life, if you know nothing about vegetables, you are guaranteed to be fobbed off with rotten tomatoes even at the neighbourhood vegetable shop. So, to expect a non-knowledgeable person to be able to access good investments is pure fiction - it does not happen in real life.
Our way is different. It starts with you, with the assumption that we are here to enable you and not to give you instructions that you do not understand or can appreciate the logic behind. Each of the major features that lie at the heart of Value Research Premium are designed with this idea in mind.
Take, for example, the Portfolio Planner and Portfolio Assist, which together form the centrepiece of Value Research Premium. Portfolio Planner consists of custom portfolios that are suggested to you. The algorithm that we have evolved takes into account your goals, your income, your saving capacity and a number of other factors. The important thing is that nothing here is opaque. The logic of the suggestions is transparent and each and every bit of information is backed up by years of data and analysis that is available on Value Research Online.
Similar is the case for Portfolio Assist. The logic of Portfolio Assist is more complex. It so happens that only a few of our members are starting their investing from scratch, for obvious reasons. For most of you, the big questions are not about where to invest next but whether your existing investments fit into your goals. This is often a hard question to answer because there are a lot of implications of switching old investments, not the least of which is taxation. In the Premium system, you can get an evaluation and a suggested fix-list based on our expert teams' inputs. Again, it's as much a learning experience as it is guidance or an investment input. Seeing what problems are identified by our algorithms and what solutions are offered are again as much part of the value that Value Research Premium offers.
The third major feature of the service is 'Analyst's Choice'. This moves investors even closer to the do-it-yourself capability. Often, investors want to choose their own funds for some particular investment purpose. This need does not fit into the Portfolio Planner framework, or at least the investor does not want to do so. Now, there are many, many funds available to you (over 1,800 at the latest count) and even with the help of our rating system, it takes a lot of work and knowledge to zoom in to the right choice. Instead of the 36 official types of funds, we have created eight investor-oriented categories which match precisely with actual financial goals that you have. In each of these, my team of analysts and I have carefully selected a handful of funds that will serve you with the best outcomes. Again, following the same principle, the knowledge of how the whole thing works and why we say what we do is just as important.
Getting things done
At the end of the day, knowledge and understanding provide the inputs and investing consists of actually doing things. In some cases, this is straightforward. For example, when making new investments in funds. However, when the task at hand is to fix problems in a given portfolio, where some investments are good and some are not and some are partly good, then the job is more complicated.
Our Portfolio Assist system is the first such system that takes you from one side to another and acts as a bridge between what your investments are and what they should be. As time goes by, we will further evolve and enhance this system to handle more complex situations and essentially be a way of simply 'Getting Things Done'.
This is one thing that the conventional mutual fund sales-oriented system cannot handle; in fact, it has no intention of handling. Since the intermediaries' earnings are tied to selling you funds, the default advice you will always get as a new client is to sell everything from the past, make a clean break and start anew. Nothing could be more damaging. Generally, there is some good in every portfolio. Moreover, unless the investor understands why something is being done, and the reasons given are real, there is no improvement in the knowledge and the understanding.
The Value Research Premium journey has only begun. We have launched the service at a difficult time, when many investors are feeling a little uncertain about the future. Come to think of it, that's a good thing. Nothing like a little adversity to test the mettle.
