Like many advisors, Vivek Rege, Managing Director of V R Wealth Advisors, started his career in financial services selling life insurance policies. He is today a successful financial planner serving 250 affluent families, says Ravi Samalad. Read the interview with Rege to know more about him.
How were your early days in financial planning?
I did my Inter CA from the Institute of Chartered Accountants of India. In the year 2003 financial services industry was opening up to the private sector. That’s when I thought it would be interesting to start a venture that will help people manage their finances better. I launched the business with my residence serving as the office. I started getting clients and by 2004 I had enough income to rent office space. I would have been a corporate or a tax lawyer if not a financial planner. But I found auditing and tax practices backward looking. Personal finance I found was forward looking.
How did you get clients in your early days?
There used to be some cold call list given by HDFC Standard Life. At that point of time we roped in clients mainly by cold calling. You did not have a legacy of clients. So you had to call unknown people. Gradually some people gave us appointments and then relationships developed. The clients I acquired then are still my clients and they in turn have given a lot of references.
So you were just distributing products?
Yes. But at the back of my mind it was very clear that my work is not distribution but advice. Right from the beginning, I made it a point that the work is done with the right approach.
What are your key learnings?
First, products are not important. Products should suit solutions needed by clients. I am not averse to any product. The client comes with a purpose. He is not asking for a product. He asks for a solution. I have never faced a situation where a client has returned with a complaint. Second learning is the importance of leveraging technology. Use it as much as possible to serve your clients. Investing in technology is the key.
How do financial planners in the US view the situation in India, given that you have interacted with them as part of visits as a member of MDRT (Million Dollar Round Table) USA?
The western markets for financial planning are more matured. One of the planners had said what is now happening in India had happened in the US earlier. But the situation in the US then was very scary as everyone was very skeptical about what would happen. But when financial planners there look back, they find that was a golden era for financial services industry as they all got elevated to a different level. They now find India in a similar situation and moving towards becoming a better industry.
How are overseas mutual funds different from Indian?
Mutual fund units often come in three classes - A, B and C. These classes vary on the entry & exit load as also the management and marketing fee. Typically, Class A units have high entry load, and second class has a mix of entry and exit load and third class has no entry load. So advisors have a choice to recommend products which suit the investor. There are people who prefer buying load products. An average investor there knows what a load fund means and how their advisors are compensated. There is no philosophy of free services. So how that fee comes and in what manner it is charged, everything is known clearly. People here don’t know that a no-load doesn’t mean they should not pay the advisor.
How do financial plans differ for people from different professions?
We have a client who is a surgeon and wanted to set up a specialty center of his own. We had to create a plan for his savings, household expenses and several other things. It’s a sort of liability management whereby you advice on the borrowings, repayments, and creation of assets as you go ahead. For clients like these, the need is different. You have to ensure that sufficient liquidity back up is created. So you can’t invest in a product which is very volatile in nature.
What are your client acquisition strategies?
I strongly believe in having referrals. We are not an institution or a big established brand. You are a small brand created out of relationships with clients. Referrals are also most cost effective way of getting clients. The conversion rate in referrals for me is 100 per cent.
What’s the profile of your clients?
We have affluent clients. They may not necessarily be HNIs (high net worth individuals) today but they will be in the future. Around 15 per cent of our clients are HNIs. We have many couples who are just married and both of them are earning a decent salary. We have approximately 350 clients.
Is there awareness about financial planners among the people?
Not much. When I was in Boston a few years back, Ameriprice had conducted a survey of how many people in the US use financial planners. The survey results showed that around 11 per cent people use financial planners, some 8-9 per cent were aware about financial planners but not using them and 80 per cent are not aware about financial planning.
Is the situation worse in India?
In India too it will take some time for people to be about financial planning and what services they can expect. If you talk about the higher income groups, some of them are aware about it. As you go to the lower level of income group, not all of them are aware.
Is pricing different for different investor classes?
No. It depends on the number of tasks you undertake in the assignment. There are different levels of services. Some clients only want a financial plan. They execute the plan on their own. We sometimes act purely as planners and just charge a fee for writing a plan.
Have you hiked your fees after the entry load was abolished?
That is already done. We are in the second round. When entry load ban happened we communicated it to all our clients that we are shifting to a fee based model. We presented them the fee model for different plans and asked them to choose their plan. This was for our mutual fund investment advisory business. As far as our financial planning business is concerned, we have not hiked our fees.
How do you plan to expand your business further?
We might set up offices in other cities too. We have clients in Delhi, Gurgaon, Kolkata and Chennai. Some of them were working in Mumbai earlier and have moved ahead in their careers. So a lot of things are developing at that end also.