Bengaluru-based adviser Deepak Chhabria of Axiom Financial Services developed a keen interest in equities during his college days. Chasing his dream, he joined a broking house at the Bangalore Stock Exchange and later founded his boutique advisory firm focused on high net worth clients in 2002. Today, he is among the top advisers in Bengaluru managing 100 HNI families.
You have predominately high net worth clients. How are the aspirations and goals of HNIs different from retail clients?
Since inception, we have been catering only to HNIs and even today that remains our focus area. I have found HNI clients to be a lot more demanding and discerning. The information available to them is much more than what is available to an average customer. They are often chased by other intermediaries and product sellers, thus at times are also misinformed, which sometimes poses a challenge.
Unlike retail investors, HNI clients come with different set of investment objectives and goals.
The wealth available with them is such that minor goals like child’s education etc. are not difficult to achieve. They are more focused on preserving, growing and wealth transfer. At the same time, they have a bigger appetite for risk and are open to considering various other products available outside of mutual fund universe.
How have the investment preferences of HNIs changed over the last few years?
A lot depends on the size of the pie. The shift from fixed income products like fixed deposits started almost a decade and a half back. Real estate, along with financial products like equities and mutual funds became the preferred destination. Now, I notice a clear shift towards financial products for wealth creation. The move is more towards institutional products like mutual funds, portfolio management schemes, alternative investment funds, and in some cases private equity and angel investing. Many HNIs prefer to pass on financial assets to their legal heirs rather than real estate assets since managing physical asset is becoming increasingly difficult.
Impact investing and environmental, social and governance, or, ESG, is catching up among HNIs in developed markets. How is the appetite for such investments in India?
Impact and ESG investing is at a very nascent stage in India. Currently, there are hardly any opportunities available to participate. However, I notice an increase in awareness about preserving the environment and governance. I expect this trend to evolve over a period of time and many HNIs may look at allocating to these funds. At this juncture, we have one fund house which has rechristened one of its existing schemes as ESG fund but I am yet to see a significant demand.
With the recent spate of environmental issues that one of the metal producers is facing and governance issues in some of the banking and financial institutions, I think in coming years ESG will become one of the main criteria to evaluate investments.
You have a high client retention ratio. How do you ensure your clients stay with you when a lot of advisers (banks, brokerage houses, wealth management firms, etc.) are chasing the same client? Some HNIs have multiple advisers. How do you deal with that?
We have been providing a complete bouquet of products and services to our HNI clients, much before this became a fad. In my experience, most of them are looking for a meaningful relationship and trusted adviser, who can take over the function of managing their wealth so that they can focus on their business and career. Someone they can turn to – bounce an idea and get an honest opinion in case of need, someone family can reach out to at times of distress. This is what I offer them. You also need different skill sets to handle HNI clients. They appreciate transparency in dealing and continuity of relationship. Ultimately, you need to ensure that they are getting what they came to you for in the first place.
How have you adopted technology in your practice? How comfortable are your clients investing online?
We have always been an early adopter of the latest technology, be it enterprise resource planning, or ERP solution, planning software or the research tools provided by Morningstar, we have it all. We have enrolled most of our clients on BSE STAR MF and NSE NM platform and try to ensure that as far possible we use these for redemption and switches. However, investing/purchases has its limitations due to bank-imposed limits on online payments. Clients in the younger age group are comfortable dealing online. The issue is with older clients who are reluctant to use online banking/payments for making purchases.
How has Morningstar Adviser Workstation helped in your practice? How has it helped you in research?
Morningstar Advisor Workstation has been of great help to us. The process of and the pace of generating research reports has improved, which saves considerable time and manpower.
The quality and depth of the research reports available are exceptional. Clients appreciate the data provided to them and these reports have been aiding in decision making. With AWS, we are able to obtain data and information for which earlier we were dependent on fund houses.
Have you considered registering your firm as Investment Adviser with Securities and Exchange Board of India?
It’s on the table but I would like to see the full and final RIA regulations. Frequent changes and uncertainty can be disruptive and derail relationship with clients. Something as game-changing as migration to the RIA model needs to be understood by all before implementation.
What key trends do you foresee in financial advisory/wealth management space over the next five years?
There is a perceptible shift towards financial assets. I see this space growing manifold in years to come. The industry assets will grow, provided taxation and regulation remain stable. The number of advisers required to service our large population is huge and there remains a large untapped market in smaller towns. Thus, the focus will shift from large cities to smaller towns. Today, clients are more open to investing in products like portfolio management schemes, alternative investment funds. This segment will grow rapidly. The understanding, knowledge, and awareness levels of investors has improved. Now, investors are willing to accept volatility associated with equity and don’t get unduly nervous.
Your Twitter bio says you are fitness freak. How do you plan and stick to your fitness regime? What is your idea of fitness?
I ensure that I spend at least an hour either walking/running or engage in Yoga. It’s all about commitment. I also pay attention to my diet. Fitness is all about feeling good, both physically and mentally. This is something that we owe ourselves.
What are your new year resolutions?
Long ago, I have stopped making new year resolutions on the personal front. What needs to be done will be done irrespective of the year. On the professional side, we review our performance on a regular basis and revise our targets. Commitment to client well being is what we aim to achieve year on year.
