Srinivasan Tiru Seshacharya, Chief Consultant, WealMan Associates of Bangalore tells Ravi Samalad that all stakeholders need to educate investors about the changing business model of IFAs. Otherwise charging a fee would be a herculean task for advisors.
What drew you into financial advisory business?
I was in my second innings as an entrepreneur managing an SME enterprise dealing in computers and peripherals. Then came a time when profitability was hit severely and manpower costs were rising steeply. At the back of my mind, I was looking at sustainable revenue from a services business. Insurance industry was a ‘trigger’ for me to enter with the advent of IRDA and liberalization of the insurance sector. I tied up with Kotak Life Insurance, progressed to Kotak Mutual Fund and the rest followed. I wanted to be into consulting and having worked in various environments for more than 20 years, I decided to get full time into consulting and I am now into wealth management & financial advisory services.
What helped you grow your business?
Skill building and constant knowledge upgrades helped me grow my business. I have attended various training programs covering various facets of financial advisory services. I have also completed CFP program which is considered as a “Gold Standard” in the wealth management community. But most importantly being client centric is our biggest strength. Providing need based solutions and helping the prospective investors take informed decisions is the mantra of success.
Which products did you sell initially?
I started with insurance with a focus on need based insurance solutions to individuals and companies.
Have you been able to charge a fee from your clients for MF investments?
Yes. I simply stated the facts of the changing scenario and SEBI circular on empowering investors through transparency in payment of commission and load structure. I asked clients to pay for the services. It may come as a surprise that most of my clients did accept the need for paying the fees.
Tell us something about the investors’ appetite in Bangalore?
The high disposable income segment is the 30-35 age group. Most of these investors are in the IT sector. People are generally IT savvy and but not necessarily savvy in their financial planning. There is so much potential to tap for financial planners.
How do you get new clients?
We usually get a lot of referrals from existing clients who are satisfied with our services. We also make group presentations to potential prospective investors.
What marketing activities have you undertaken?
We generate leads through investor awareness programs, group meetings and mailers. These leads are followed up through telephone.
There has been a lot of media spotlight on distributors. How did that affect you?
The media highlighted the bad and not the good practices of the independent advisors. So the going was tough because of the negative perception among investors and general public. But by sheer persistence, patience and consistent efforts in client services we were able to break through these barriers.
How do you win the confidence of your clients?
Knowledge, professionalism, transparency coupled with a code of conduct to constantly reassure that the client’s interests are taken care of.
What is the best advice you ever got?
Don’t short sell yourself!
You have close to a decade of experience in financial advisory. How have you seen the advisory business evolve?
To begin with, one started off with tapping family, friends and colleagues. Initially, we focused on creating the correct positioning of these products with some aids from the manufacturers. Our revenue was entirely from commissions from these manufacturers.
The ban on entry load though with a good intent but bad understanding of the customer psyche led to some advisors focus more on products like insurance and ULIPs etc. to make up for the lost margins.
Yet this intervention by the regulators made some advisors realise the importance and necessity of survival and made them bold enough to ask or charge the customers for the services rendered. Better late than never!
Fee based services are here to stay, though some resistance is expected for those who thrived only on ‘relationships’. The need of the hour is a combined efforts of all stakeholders to educate and enrich the customers to respect and pay for the services which they took for granted.
What kind of turbulent times did you face in your business and how did you tackle them?
Regulators intervention in the IFA domain in the name of protecting the investors caused confusion among the retail investors and HNIs and the downturn of the general markets during the sub-prime crisis eroded the confidence further.
Communication was the key to explain to the customers the macro environment and the changing situation and being in touch with the customers whenever they needed the most.
What next?
The next step would be use of online platforms to further my business. As I have indicated innovation is the key to exploit the current situation. I am now advocating across all AMCs that instead of incurring a cost which is inevitable in offline transactions, invest in CRM and create a link with online transactions which will have the ARN number tagged to get the due credit from the AMC. Online platform needs to be exploited without the distributor getting worried. This is where AMCs need to be proactive to encourage, guide and train people to adopt online tools for deployment of investments.