Lovaii Navlakhi of International Money Matters had been a man of finance all his life. Lovaii left his job in 2001, around the time of the World Trade Centre attack and the dot-com collapse.
Sharing his journey on how he became an IFA, Lovaii says, “A few of my former colleagues had asked me to help them with their finances and I obliged them out of courtesy. It was only then I realised how much I enjoyed this work. From then on I have never looked back.”
Business model
Lovaii started out as a mutual fund distributor in 2001. He has always had a client centric approach in dealing with clients. He has helped his clients identify their financial goals and invest accordingly. Appreciating his dedication to them, a few of his clients suggested him to start charging a fee. “Initially, I told my clients that it was not necessary as I was already earning a commission. However, a few clients insisted that I was giving them a better service and was doing much more than mere distribution. They insisted that I must collect a fee for the additional value I provide,” he says.
In 2003, Lovaii shifted his model from a commission-based to a fee-based structure. “This was a decade before the RIA regulation but I felt that by being a fee-based advisor, I would stand out in the crowd,” he adds.
Recalling the rationale behind going fee-based at a time when most of his contemporaries were earning through commissions, Lovaii says, “The primary reason was to bring in a fair practice in which we were not tempted by incentives and remain true to our clients. The second reason was to be able to put a value on our services. I wanted to see how much of a value-addition we could give our clients.”
When the RIA regulation came out in the year 2013, Lovaii was one of the first to register.
Client acquisition
Today Lovaii caters to an active customer base of 500 with an AUM nearing Rs.1000 crore. Here are some of the activities that have helped Lovaii expand his client base.
- Professional contacts: From the beginning, Lovaii has been particular about expanding his business through his professional contacts only. “Even in my initial days, I did not approach my relatives or school friends. Instead, I approached only my former colleagues and other people I had met in a professional capacity. This way, the business I acquired was on the strength of my capability and not out of personal sentiment,” he admits.
- Referrals: Lovaii primarily expands his business through word of mouth and referrals. His business motto of ‘Under promise and over deliver’ has helped increased his clients’ trust in him. “We try not to promise things we are not completely sure of. By setting conservative expectations, our customers are overjoyed when we surpass them,” he points out.
- Social media campaigns: Lovaii has acquired many clients through social media. “My business development team came up with the idea of using social media to conduct financial awareness campaigns. Many people who saw these campaigns approached me later to discuss their finances,” says Lovaii.
- Financial Literacy drives: Lovaii conducts many investor awareness programs in association with AMCs. “Many investors approach me after such programs, expressing a wish to have their portfolio looked at,” he remarks.
SIP Book
SIPs make a significant contribution to Lovaii’s AUM. “We are goal-based financial advisors and SIPs are best suited to meet long term financial goals. Today we have an SIP book of over Rs. 3 crore per month, with an average SIP of close to Rs.15000. We have more than 2000 SIPs with us,” he says.
Talking about how he encourages his clients to invest through SIPs, Lovaii runs us through the various steps he takes.
1) Education: Today getting clients for SIP is quite easy thanks to the awareness programs taken up by the industry, says Lovaii. He recounts, “Mutual funds were not very popular among investors those days. So convincing someone to invest in an SIP of a mutual fund was difficult. I had to educate clients on the advantages being invested for a long term and dispersion of risk through SIPs. Though I got them interested and even convinced them to start a small SIP, it was only when they personally enjoyed the benefits of the SIP did I start getting more SIP accounts.”
2) Build the plan: Another method of convincing clients is to link SIP investments in mutual funds with 
financial goals. “I find that persuading my clients to consider achieving their goals through SIPs works. I first draw their financial goals and then explain how they can diversify the risk by investing through SIPs,” he says.
3) Show historical data: Showing the benefit of investing in mutual funds through SIP over lumpsum has helped him built conviction, says Lovaii. “Often, when I find a client unsure of a commitment to SIP, I show him how the SIP has worked out for others. This usually convinces the client,” explains Lovaii.
Things to keep in mind while handling SIPs
Giving pointers on handling SIP clients, Lovaii says, “The first and the foremost thing that advisors need to remember is that just starting an SIP is not an end onto itself. You need to revisit your client’s goals at regular intervals.”
He also insists that advisors must remember that equity is just one option, “If your clients are not sure about SIP, you could start them off on an SIP for liquid funds. Once their confidence level increases, they might be more willing to start SIP for equity. Another important thing is the investment habit. Once that is inculcated, the advisor need not fear,” he says.
Key learnings
Talking about what he has learnt as a financial advisor, Lovaii lists out three key learnings,
- Change is an opportunity: “The first lesson I learnt, as an investor is that change is not something to be afraid of, instead it is an opportunity for advisors to interact with their clients. I always look out for new changes that might come and try to mould my business accordingly,” says Lovaii.
- Knowledge gives edge: “In an industry where everyone is offering the same or similar products, the only edge an IFA has over his competitor is knowledge. I never lose an opportunity to upgrade my knowledge and in turn my services to my clients,” he says.
- Constant evolution a must: While Darwin might have propounded the theory of evolution, Lovaii is its living example. “You cannot do the same thing again and again and expect a different outcome. Just think, why would an investor need your services if you were not adding any value to him? The only way to carve a dedicated investor base for yourself will be by increasing your offerings to meet the growing demands of your clients,” he says.
For the future…
With the recent investment of TVS Capital’s Chairperson Gopal Srinivasan and industry veteran Narayan Seshadri in his company, Lovaii says he is looking forward to tremendous growth in the coming years. “We hope to increase our client base while maintaining our standard of client care. Though we have fixed targets for the coming years, I am not at liberty to reveal them. But, you will certainly be seeing more of us,” he says.