‘My business grew after SEBI came up with direct plans’

Sep 10, 2018
Read on to find out how Melvin Joseph built a clientele of 300 clients who pay him fee.

At the age of 42, Navi Mumbai-based Melvin Joseph quit his cushy job to pursue his entrepreneurial dream. One of the earliest RIAs to register with SEBI, Melvin chats with Ravi Samalad on how his business grew after the introduction of direct plans. Today, he has 300 clients paying him an annual fee.

Tell us about your early career. What inspired you to become a fee-only planner?

In 1989, I joined LIC as an Assistant and gradually moved up to the rank of Branch Manager. In 2000, the insurance sector was opening up and I did not want to miss the chance to grow. Even though my friends and well wishers warned me against leaving a cushy government job, I resigned and joined the private sector. Within 10 years, I moved to the rank of Country Head with the then number-one private life insurance company in India.

Though my career was growing exponentially, I did not have internal satisfaction. I always used to think, whether I am doing justice to the customer and am I selling the right product to customer?

I heard about CFP and I was confident that this is the way forward. It was a tough decision to leave a high paying job at age 42.  I was confident about the prospects of the Financial Planning industry but was not sure how much time will it take to bring results.

I took a decision and started my own firm Finvin Financial Planners in 2010.

The vision of Finvin is to offer unbiased financial advice to customers at affordable prices. I am not selling any financial products to ensure that I’m offering 100% unbiased advice.

How did you your business grow after the introduction of direct plans?

When the direct plans were introduced in 2013, I started writing articles on the difference in returns in direct versus regular plans, which you can check on my website. People were not ready to believe that within a span of 20 years, you can have around 15% more in their accumulation in direct plans. All my existing clients were moved to direct plans immediately. Existing clients helped me in bringing more clients through referrals. In the same year, SEBI came out with Investment Advisor’s Regulations and I registered as an Investment Advisor with SEBI. Introduction of direct plan & SEBI registration gave a push for my business from 2013.

Charging fee to retail clients could be difficult. How did you convince your clients to pay fee?

The fee only advisory is still its nascent stage. People themselves have to realize that it is their own money and they can play with it the way they want. They can either come to a fee-only financial planner and pay fee for a neutral advice or can get free advice of buying an endowment plan and pay huge commission without their knowledge.

My thinking is like this. If you are investing Rs 10,000 per month in a regular plan of mutual funds which gives 12% return, the accumulation will be around Rs 1 crore in 20 years. If you invest in the same fund under direct plan, you will get around Rs 1.15 crores. You gain Rs 15 lakhs on a monthly investment of 10,000. My fees for the next 20 years will be 1.58 lakhs, which is just 10% of the above gain. Now, you can see how much you can gain when you are investing in the range of Rs 50,000 – 80,000 per month. My service is not limited to mutual fund recommendation; it covers the whole spectrum of personal finance for an individual.

I normally do not push clients to pay fee. Being a sales person for the last 30 years, I know the customer psychology to some extent. The customer should realize that it is a win-win situation for both. They are happy because they achieve their financial goals without much stress and cost. I am happy because I am helping them show the path to achieve their financial goals and earn a decent income.

Which transaction platform (MF Utility, BSE, NSE) do you use for executing direct plan transactions?

I am not executing transaction on behalf of my clients. I make clients to do it by themselves. As far as possible, I motivate them to use the individual AMC websites for direct fund investments. Otherwise, MFU, if they are keen on a single login.

How did you build a customer base of 300 who pay you a fee? What marketing strategies helped you?

It was not an easy journey.  I was not getting many clients in the first three years. I was living on my own savings. But after that my client base started increasing. Referrals from existing clients, testimonials from existing clients in media like Mint, Hindustan Times etc. helped me in reaching out to new prospects. Around 12 of my clients were featured in Mint in their weekly column – My Plan. Now people have started realizing the value addition of a fee-only financial planner. I am now having clients in almost all major countries.

Here are the other strategies which helped me to grow:

Asan Ideas For Wealth: It is a Facebook group created by Ashal Jauhari. He is an engineer with passion for personal finance. Believe me, this is an awesome group of around 50,000 members. People talk only about personal finance in this group, no nonsense. This group is doing an amazing job in spreading financial literacy. Some members can manage their personal finance by themselves. If they can’t do it themselves, they can approach a fee-only financial planner.  I am getting many clients from this group because they feel this as a step in the right direction towards their journey in becoming a DIY investor.

Special thanks to dear Ashal Jauhari for creating such an awesome group and helping many investors totally free.

Freefincal.com: A blog with wide reach which tells you everything about personal finance, whether you are a beginner or a pro. List of fee-only financial planners in India by Freefincal is helping people find the right person for their financial planning. I am in this list from 2013, immediately after I got SEBI registration.

Special thanks to dear Pattabiraman Murari for creating awesome calculators for DIY investors.  He is a professor of Physics in IIT, Chennai.

Referral Clients:  When I say happy customers, my clients are really happy. They promote me even when I never ask anyone to do this. Would you believe me if I say every happy customer can give you five more customers? But it is happening. I am getting a lot of referral clients from my existing clients. In most cases, they have not seen me, but still refer!

Tell us about Fee-Only India group.  What is the objective of this group? Do you plan to make it a pan-India association of RIAs?

Fee Only India (FOI) is an informal association of pure fee-only financial planners who follow certain code of conduct. Prof. Pattabiraman Murari and Ashal Jauhari are voluntarily acting as patrons. We are now 10-member team covering many cities in India. We support new entrants to the fee-only movement by handholding them from the application stage to setting up of business. The entry to this group is limited to only such planners who are in no way connected with distribution of any financial products. We meet once in six months and discuss the common issues we are facing in this emerging profession. Our aim is to create and support a large number of such planners across the country for the benefit of the common man.  We don’t want to create an association.

Are you planning to scale up your practice or would you prefer to operate as a boutique?

First the first seven years, Finvin was a one-man firm. Now, we are a team of three including another Certified Financial Planner. My aim is to reach out to maximum deserving persons and offer this service at affordable cost. I will scale up this within the purview of the SEBI regulations. But Finvin will remain as a firm without any distribution linked activities.  Each client will get personalized service.

What would be your advice to someone who is planning to take up fee-only advisory?

It is an emerging sector with low awareness. You can take this a handicap or as an opportunity. I see huge opportunity ahead. If you are ready for a three-year gestation period, it will be a rewarding career. If you are interested in becoming a fee-only planner, you can contact me at   melvin@finvin.in  for any support.

Add a Comment
Please login or register to post a comment.
Sep 13 2018 08:40 AM
@Vinamra Gharat -

1. I don't think he is saying that 100% of distributors are biased, there can be some genuine distributors - but the model of advisor-cum-distribution thus created allows room for conflict of interest (AMC, Advisor-cum-distributor, Investor)
But whereas when there are just 2 parties involved (SEBI RIA, investor) there is 0% conflict of interest - and hence the advise is unbiased.

2. Also when the fees reduce it would reduce for direct plans as well. Already we see very steep difference between direct and regular, and SEBI is even asking AMCs who keep the fees without min 1% diff to come clean on these - so yes if costs go down direct plans benefit the most.
Vinamra Gharat
Sep 12 2018 01:54 PM
I want clarification:
1) Rs 1.58 lakhs is adjusted every 3 years considering inflation?
2) Assuming if you also compound fees at 12% p.a. for next 20 years, adjusted to future rise in fees, what figure it comes? In short have you done NPV analysis with fair assumptions?
3) Assuming that future expense ratio decreases substantially and come at par with global average, does it still make sense to go for paid services?
4) And why do you feel that an RIA is 100% unbiased while all other intermediaries are less than 100% unbiased? I think it's not correct way to address an intermediary who is as unbiased and intelligent as they can get!
© Copyright 2024 Morningstar, Inc. All rights reserved.
Terms of Use    Privacy Policy
© Copyright 2024 Morningstar, Inc. All rights reserved. Please read our Terms of Use above. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
As of December 1st, 2023, the ESG-related information, methodologies, tools, ratings, data and opinions contained or reflected herein are not directed to or intended for use or distribution to India-based clients or users and their distribution to Indian resident individuals or entities is not permitted, and Morningstar/Sustainalytics accepts no responsibility or liability whatsoever for the actions of third parties in this respect.
Company: Morningstar India Private Limited; Regd. Office: 9th floor, Platinum Technopark, Plot No. 17/18, Sector 30A, Vashi, Navi Mumbai – 400705, Maharashtra, India; CIN: U72300MH2004PTC245103; Telephone No.: +91-22-61217100; Fax No.: +91-22-61217200; Contact: Morningstar India Help Desk (e-mail: helpdesk.in@morningstar.com) in case of queries or grievances.