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I completed my MBA in marketing and finance in 2008 and joined Dawnay Day in 2008, which became Destimoney Securities. I started off in Mumbai for 6 months and then was moved to Delhi, where I worked for the firm for 6 years until Oct 2014 in the wealth management business.
Dealing with conflict of interest
I developed strong relationships with my HNI clients based on complete honesty and trust. Often, when you work for a wealth firm, you are asked to sell certain products to your clients to help meet organizational targets. I resisted the pressure to sell what I didn't believe was right for my clients and even when I went and spoke to my clients about certain products which may not have been my first choice but were ok from the portfolio perspective, I made it clear to them that I am speaking to them about these products due to an organizational focus on the products. I guess my honesty and integrity towards doing the right thing for my clients built trust and strong bonds.
Brands don't matter - relationships do
I was clear that I needed to strike out on my own, if I were to really do full justice to my clients. But I also realized that it's not easy, until you have a decent book size that you are confident of starting with. I had mentally set a target of 50 cr AuM as the threshold when I would leave and set up independent practice. I reached 50 cr and within 7 days, I put in my papers. Before I resigned, I spoke with my clients, told them my thoughts and sought their guidance. All of them told me to go ahead and start out on my own and expressed confidence in my ability to manage their finances independently.
When I actually started my firm in Oct 2014, all my key clients who I had spoken with, decided to come with me. That drove home a fact for me about the wealth business - brands actually don't matter - relationships do.
Put your clients' interests first - and they help you further your interests
Its been a little over 2 years since I started out. I have 70 HNI families as my clients with a MF AuM of Rs.107 crores. For me, its 70 families where I am like a member of their families. Many of these relationships are over 7 years old - right from my early days in Destimoney. As an independent advisor, I don't have any external pressures to resist - I only do what is in the best interests of my clients and their portfolios. So, if the right thing is to stay liquid or park money in arbitrage funds which pay insignificant commissions, I do that.
The upside of sacrificing your interests and putting your clients interests first is that your clients are very happy to further your interests. So, whenever I ask my clients for referrals, they happily oblige me. In the last 1 year, I have added 15 new client families - and each one of them is a reference from my existing clients.
When I go for my initial meeting with a referred prospect, I have a full background of who the prospect is, and the prospect has already been fully briefed by my client about me and my advisory model. That makes it so much easier to hit the right notes to start off the relationship. If you do the right thing for your client, they are happy to go out of the way to do the right thing for you.
Most of the threats are in our minds
People say the HNI segment in a large city like Delhi is very competitive as every large bank and wealth firm is active here, awareness of direct plans is high and AMC teams are also active in the HNI and SME segments. As far as banks and wealth firms are concerned, I don't worry too much about them since all my clients came to me after dealing with banks and wealth firms. They obviously found some gaps in the way their money was being managed, which is why they chose an independent client centric advisor. As far as direct is concerned, my experience is that when you are dealing with successful professionals, they don't have either the time or the inclination to go direct - unless they consider that option after being disappointed by the services of their advisor/banker/wealth manager. It is dissatisfaction and not cost which is the primary driver for most HNIs. I am not saying this is true in all cases - I too have had a few clients who have asked me about direct plans. I explain the value proposition of both options clearly to them and also offer that should they desire to invest in direct plans, I will facilitate their investments anyway. More often than not, the conversation on direct does not progress much after that. My take on direct plans therefore is that they keep you on your toes in ensuring that you are being client centric and are delivering value. They help you raise the bar of your service, but are not a real threat unless you choose not to raise your bar.
Disclosure is the other big conversation among advisors. I have had a few clients who talked to me about commission disclosure after they received their CAS statements. My response to them is simple, and comes from the fact that every client of mine (and probably most HNIs in the country) have dealt with real estate brokers. They readily pay a 1-1.5% commission to the broker who is efficient, client centric and sees through their transaction in its entirety including all the documentation. They go back to the same broker for their next transaction, while shunning brokers who don't deliver value. My fees for the value I offer in their financial portfolios is the same 1%, which is paid by the fund house to me, and my job is to ensure that I deliver value for the fees paid. Some clients are curious about commission disclosures, but I believe this curiosity translates into action on looking for alternatives only when they don't perceive value in your services. As long as you are doing your best for your clients, I don't think they will grudge you your fees.
The bottom line for me is this: trust between you and your client is more important than anything else. Never mis-sell, never mislead, never do anything that breaches this trust. As long as that's your primary focus, I don't think one should be very worried about competition, direct plans, disclosure and other such issues. I believe most of the threats are only in our minds.
BIG plans over next 5 years
I have big plans for MoneyTree Advisors over the next 5 years. My aim is to scale up my AuM to Rs.500 crs in the next 5 years. I will explore markets beyond Delhi as well. My focus will remain the HNI segment. However, I am evaluating online opportunities for the retail segment as well. There is immense scope for client centric advisors, and I intend leveraging this demand to scale up MoneyTree Advisors significantly in the next 5 years.
Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.
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