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  • Success Stories Kartik Jhaveri wants to be the McDonalds of financial planning

    Kartik Jhaveri wants to be the McDonalds of financial planning

    Kartik is well known face in the financial planners community wants to put his rich experience in advising conglomerates to use in his venture by adopting a franchisee model of financial planning, Advisor Corner
    Ravi Samalad Dec 21, 2011

    Kartik is well known face in the financial planners community. He wants to put his rich experience in advising conglomerates to use in his venture by adopting a franchisee model of financial planning, much like McDonalds, says Ravi Samalad.

    Karthik JhaveriMumbai: Unlike many advisors who get in to financial advisory by accident often through totally unrelated professions, financial planning and financial products have been an integral part of Kartik’s career right from the beginning. Kartik was among the first five employees of both HDFC Life Insurance and ICICI Life Insurance.

    Post that he worked with a leading Singapore based consulting firm where he helped large conglomerates establish their wealth management and financial planning ventures. His task would end only when the business was made fully functional with a clear business plan and strategy.

    So, setting up a financial planning firm for himself was a cakewalk. He floated Transcend Consulting in 2004. His firm solely focused on financial planning from day one. He didn’t want the “hot money” from HNIs which could have boosted his assets under advisory quickly. Even today, he doesn’t entertain such clients.

    At a time when most advisors were actively selling mutual funds during market rally, Karthik started sowing seeds of financial planning in blogs and newspapers. Being among the few people talking about financial planning at that juncture, he drew a lot of attention from his readers.

    Kartik hired few interns initially. He developed financial planning software and research capabilities during the initial four months. To start out, Kartik tried his luck with a “partner model” wherein IFAs could use his expertise in financial planning and implementation.

    He approached some mutual fund distributors asking them to talk about need based planning to their clients instead of product features. This way IFAs could sell more by educating about insurance, retirement, education, estate planning and will. Under this model, he was ready to give a lion’s share of revenues to IFAs in return for a nominal fee for his research and plan execution. However the idea didn’t click with IFAs as they didn’t wish to share their client details. He says that adopting financial planning model would have fetched IFAs five times more revenue as the entire gamut of products would fall under the client’s financial plan.

    Simultaneously Kartik was also holding seminars, writing in newspapers and talking to people about his services. “Written words were far more powerful. People started enquiring about financial planning,” recalls Kartik.

    Kartik charges a fixed fee for constructing financial plans irrespective of the portfolio size. He caters to around 200 families. Due to the tied agency model, he has not tied up with any insurance firm. He only advises clients to buy the cheapest term plan.

    Today, Kartik has not built a colossal AUM but has created a niche, respect and credibility for his services in the minds of consumers. His clients are upwardly mobile families who desire to achieve a certain goal in their life. “If you talk about retirement planning to businessmen having high net worth, it may not connect with them. They don’t have a retirement age. Families have different issues depending on their backgrounds and circumstances,” says Kartik.

    Kartik says his firm is a one-stop shop in a true sense which offers comprehensive financial planning, estate planning, wills, filing tax audit and returns, quasi banking, advance tax, etc. According to him, a one-stop shop is not one which just offers a host of products under one roof.

    Today, he has five freelancers who are very much committed like his employees. They work on a revenue sharing model with Transcend and are allowed to use his brand name and resources. This is a similar model which he had proposed at the beginning.

    The road ahead

    Kartik sees huge opportunity for financial planners in the retail market. He is planning to unbundle his comprehensive planning services for people who need to achieve a single focused goal like estate planning, retirement, insurance, tax planning, etc.  He wants to refocus on his “franchisee model” which he had mulled in 2004 wherein he would provide his expertise in facilitating financial planning from scratch to end to financial planners.

    “The idea is not to become my agent. They can charge a fee to their clients. They can use the brand Transcend. We will provide all the handholding from customer acquisition to implementation of plans. We are still working out the model, “says Kartik.

    On the regulatory changes in commission structure Kartik says all advisors and IFAs need to be on the same page with a determined willingness to charge a fee.

    “As long as the manufacturer is paying, IFAs will be forced to remain agents. But nobody wants to pay because a majority of advisors are offering their services free of cost. A few people can’t change the direction of how a practice is supposed to be operated. The entire advisory community is an enemy of itself. Everybody should start charging otherwise clients can always go to people who are offering their services free. The client mindset will only change if everybody charges a fee. If you go to a lawyer or doctor you carry some cash. You can’t tell them I will pay you tomorrow. A fee based model will automatically enhance service offerings,” explains Kartik.

    Kartik operates from Mumbai’s Nariman Point area with a team of 20. He is a familiar face on personal finance television shows and his columns appear in leading financial dailies. As we wrap up the interview, he has to rush for a business channel’s personal finance show.

    You can reach him at kartik@transcend-india.com or contact him on 40024043/4/5

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