Quantum Direct Investor Information Initiative

Celebrating Gandhiji's Principles: Precise Communication Monday, Aug 05, 2019

Gandhiji believed that all communication needs to be precise, jargon free and clear in order for it to be effective.

In 1917, when efforts of leaders like Pandit Madan Mohan Malviyaji did not yield desired results, Gandhiji took up the agitation by starting a tour of India. Three proposals were discussed at the first meeting in Bombay, convened by Mr Jehangir Petit and attended by various dignitaries. One proposal favoured abolition ‘as soon as possible,’ another by ‘31st July’ and the third favoured ‘immediate abolition.’ Gandhiji favoured the option where a definite date ‘31st July’ was mentioned. His reasoning - ‘Immediate’ was open to multiple interpretations by people - the government in one way, the people in another. There was ‘no question of misunderstanding 31st July’ and this would give them the way ahead if nothing was done till then.

If you have got nothing to hide and are willing to be honest and upfront with your audience, then you will always favour precise and clear communication. On the other hand, if the intention is to hide something or mislead the audience, then you will resort to confusing and unclear communication. Effective communication is the result of understanding how messages are likely to be interpreted by various audiences and tailoring your message accordingly.

Why Precise Communication is the Cornerstone of Effective Investment Decision Making
Every investor has an idiosyncratic risk/return profile which can vary at different points in time. The type of investment choices an investor makes is incumbent upon his financial goals, return requirements and risk profile. Consequently, it is important for an investor to know and understand the risk/return profile of the investment product as well. He needs to ensure that the product he chooses to invest in will give him the desired return in the expected time horizon and within his risk boundaries. Incase there is a mismatch, the investor is at risk of not achieving his financial goals.

This is where precise and clear communication plays an integral role. An investor can make an informed choice only if the true facts of the products are communicated to him in a simple and jargon free manner. When it comes to investment decision making, many investors balk at the prospect of choosing investments. This stems from a general fear of finance and lack of knowledge. Both of these can be addressed by financial institutions through precise communication. Fund houses should clearly articulate the value proposition of the product while highlighting its key benefits, the risk it carries and the investment time horizon. They can also communicate the suitability of the product for different kinds of investors so that one can make an informed investment decision.

For example: There is an investor who is looking to buy a car in two years. He has median income and has recently married. Now, conventional wisdom would suggest that such an investor should choose to invest in shorter-term products that carry average to below-average risk. The investor reads the product brochure of an investment opportunity that focuses on making superior returns in the short-term. For a lay investor, this might seem like a compelling investment opportunity. However, it would have been instructive for the brochure to also mention the risk in this type of investment and put an indicative number to “superior returns”. After all, in a market that is generating 4% returns, even 6% could be superior while in a market that is generating 20% returns, 6% would be sub-par.

Communication is a Two-way Street
For communication to be effective and have the desired impact, it needs to be a conversation and not a monologue. Investors need to clearly communicate their requirements and concerns to the appropriate stakeholders. These could include their financial advisors, the financial institutions and the regulators bodies. Communication that is clear and precise inspires trust and ultimately benefits all stakeholders of the society.


Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.