You started your practice after a long career in banking and insurance. What made you don the hat of a financial adviser?
I have spent almost 22 years of my career in banking. I have also worked with the Reserve Bank of India. In my last assignment as the chief risk officer at a private life insurance company, I discovered the company had low persistency. Mis-selling was the primary cause for this low persistency. I also found product selling was driven by commissions and incentives at the cost of client interest. There was a dearth of quality financial advisers providing clients a holistic advice. Thus, I decided to take the plunge in 2013.
How did the idea of writing your book came about? Can you take us through how has it been received by people?
I realized financial literacy is the need of the hour and decided to spread financial awareness. In this mission, I took various initiatives. Authoring a book was a step in this direction. The book has been appreciated by many for its simplicity and being non-jargonistic.
Besides, I have also conducted classes in various schools of Navi Mumbai and helped students appear for NFLAT examination conducted by National Institute of Securities Market. One of my students got shortlisted as all-India topper in 2013.
You have a limited client base. What are the advantages of having a focused clientele? How many clients would you ideally aim to manage going ahead?
I think an adviser should focus on advice and not on products. The value proposition should be on asset allocation, expenses management and behavioral changes. Having a limited client base helps in maintaining a direct contact and establish trust with clients. Currently, I have 70 families as clients. I think I can personally manage up to 200 families.
In its last consultation paper, SEBI had proposed that individuals and corporates can’t operate both advisory and execution outfits. It proposed that they have to offer either of the two. What are your views on this? Should RIAs be allowed to offer execution as well?
Initially I offered only advisory by offering Financial Planning. But after the plan was prepared, I was confronted with the question from my clients "What is the use of the plan if you do not execute it?" SEBI introduced direct plans from 2013 and online term plans started getting popular. So I started offering execution services through direct plans and online term plans. There is no conflict of interest in these products. I believe RIAs should be allowed to offer advice and execute commission-free products through direct plans.
What according to you are the reasons for low acceptance of RIA model in India. What is hindering people from becoming RIAs? Is charging a fee from investors a hurdle?
When we charge a fee to the client, we should be in a position to demonstrate our value. If clients see the benefits of the advice, they will to pay for it. But this takes some time. Initially, I had some clients who were reluctant but now I do not see any hurdle in charging fee.
Whom do you look up to in the field of investment management and particularly among advisers?
In India, I have learnt a lot from Gaurav Mashruwala. He has great understanding about the behavioral aspects of handling clients and I like his down to earth approach. I also follow Michael Kitces for getting global insights related to our practice. I enjoy his Weekend Readings for Investment Advisers.
What would be your advice to budding RIAs?
They should have a passion for providing the right advice, acquire technical and soft skills and keep themselves updated. I believe use of technology is pivotal for any adviser to succeed today. I best way of growing business is through referrals. Lastly, they should focus on creating and maintaining trust.
