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25 September, 2022 14:09 IST
Advisor

`Keep learning process on in financial planning field`

Source: IRIS (17 January 2011)

`Keep learning process on in financial planning field`
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In an interview with Yogita Khatri of myiris.com, Hiral Thanawala, Certified Financial Planner (CFP) at Self Employed, says ``To become a successful planner keep the hunger growing of becoming a winner in this field, analyze different clients from various background to learn specialize skills.``

Hiral Thanawala, a certified financial planner is in investment and advisory field from last five years advising clients, friends and relatives. He had started my career with a sub broker to advise investors on their investment decisions, recommending stocks and mutual funds to add in their portfolio. Now, he is self employed and works on financial planning for clients from last two years.

> What led you to opt for a certified financial planner (CFP) course and to choose a career in financial planning? How long have you been in the profession of financial planning? Tell us about your experience.

During my college years, I had found my parents dependent on insurance agents and investment advisors which usually fooled them easily with their marketing gimmicks to earn higher commissions on products sold. This made them invest into products which were not as per their risk appetite and far-far away from goals for which they wanted to invest. This is a common story for many people in India. I believe having literacy of personal finance for our self is a must so opted for certified financial planning course to learn and be independent on my personal financial planning. Then I found it`s a good platform to start our own venture and spread the literacy / awareness for need of financial planning in each individual` s career. So, here I am in the field of professional financial planners from last two years to provide ethical advice and help others achieve their set goals in life. The experience has been amazing to meet different people on regular basis from varied income groups and background i.e. lower /middle class income group to HNIs which has different level of risk appetites. I have met professionals such as self employed /doctors / engineers / monthly regular income people. They all may have same monthly income but goals vary which makes it interesting to analyze their case and recommend customized financial plan for them.

> What are the emerging trends in wealth management in India?

During 2003 - 2004 year, if someone recommended common man to take an advice from wealth manager that man would be thinking who is he...? Why I shall discuss my personal finance decisions with him...? But now in last two to three years the scenario has changed. There is awareness among population of India on wealth management practice. We are also noticing that for the first time the ability to earn and save are slightly different for people. Earlier investors would invest their money in some guaranteed return products but now they want the investment decision to be taken after analyzing the product, considering goals and understanding risk involved in it. The PSUs and private banks have commenced with wealth management services from last 2-3 years. Now, they are exploring hinterland of India to grow their business by spreading the literacy of wealth management services. There are private players, financial institutions / broking houses which are providing personalize as well as online wealth management services to reach the customers easily. In future the wealth management services will be explore to larger population due to literacy drive from media.

> The recent fraud case in a bank`s wealth management unit has put a spotlight on the way wealth management businesses are conducted. Do you see that as a positive or a negative development for advisors? How do you see the business environment for advisors in 2011?

The recent fraud case is an individual issue from a company not primarily on whole wealth management segment. It could have happened to any other foreign, domestic, PSU or private banks. I don`t see this affecting majorly to other wealth management companies and private players. It`s necessary to be stringent with internal controls, keep the automatic trigger updates for falling value of investments in asset allocation, tighten the policies of investing and safe guarding the fund allotted so no such issues happen in future. Also, there are lesson for investors from this case: 

1) To keep update on how and where the money is being invested at least once in a month if the amount is too hefty.

2) Keep a senior manager from branch / company in loop while investing huge amount through relationship manager of that AMC. 

> According to you, what key skills are necessary to become a successful financial planner? What is your advice to aspiring financial planners?

In the field of financial planning keep the learning process on. There is always room for improvement. To become a successful planner keep the hunger growing of becoming a winner in this field, analyze different clients from various background to learn specialize skills. Also, keep yourself updated with the international and national news for any changes in regulation. Then analyze new product launches in personal finance segments to recommend existing and new clients.

> The competition in wealth management has been intense, with a number of players having plucked in recent years. How do you place yourselves in that league?

It is rightly said, ``India is a land of opportunities``. So, it`s obvious there will be competition for any business which has opportunity to grow and serve many customers. As, I said every business idea has the competitor but what makes the difference is quality of service, level of trust with each other, transparency in work style, sharing of information to the wealth manager, etc. Currently, I don`t consider myself into this competition because my business has just commenced and have reasonably good client base to which I personally meet and analyze their risks / goals followed by their financial planning.

> Please share with us your view on the several changes that advisors are facing in recent times?

The changes which are being made by regulators are considering the benefits investors / clients get from it. So, recent reduction in earning commissions by selling mutual funds and insurance products was to remove the intermediaries and stop pushing off products for earning higher commission income. In future the income for advisors shall be completely fee based or timely basis. This will create the working between both parties transparent and smooth. 

> What are the aspects that matter you when selecting funds for your clients? Your top 3 equity fund picks and debt fund picks with key attributes you like in them?

While recommending any fund I would understand the goals, risk appetite, time horizon and debt position of an investor. This gives the clear picture of financial health and capability. The top 3 equity funds I advice to invest are HDFC Top 200, SBI Contra fund and Fidelity Equity fund because they have invest into mid cap and small cap equities after analyzing. Also, it has tremendous potential to grow in long term. This scheme has given decent performances pre and post recession phase.

For short term plan / monthly income plan I consider HSBC, Reliance and HDFC the best AMC to invest. The equity and debt ratio of these schemes is perfect for conservative investors. They have delivered good results by churning out profits and distributing dividends on regular basis.

> What is your take on current market situation? What are the key factors that will drive the stock markets in 2011? What is your advice to retail investors now?

The year has begun with many volatile sessions and negative closing index. The concerns are high inflation numbers and scams in last few months. The regulatory bodies are making the best efforts to control it. Now, the investors would be eyeing the outcome of RBI meet to control the inflation followed by union budget in month of February, 2011. The drivers for the market would be GDP numbers and net profits earned by companies in FY11. My advice to investors would be to invest in stocks which are undervalued for long term horizon and sell off from overvalued stocks by booking the profits. There are many opportunities to enter in the stock but difficult to exit in falling price of that stock.

> How often would you suggest reviewing and rebalancing a portfolio?

I would suggest an investor should review his portfolio once in each quarter and rebalance the portfolio once in the year considering the goals achieved and risk appetite. When there is a need of cash due to some emergency then take the quick advice from financial planner on requisite action and rebalance the portfolio accordingly in near term. Also, don`t panic during volatile sessions of stock market. An investor shall invest for long term horizon into equities so shouldn`t worry of such swings in index.

> What three books related to personal finance would you recommend every person read and why?

The 3 personal finance books I would recommend are as follows:

a) Secrets of the Millionaire Mind by T. Harv Eker
This book helps realize the readers what money habits they have developed since the day of born. It brings out those unconscious thoughts that are holding back from achieving financial success.

b) Rich Dad, Poor Dad by Robert T. Kiyosaki
No doubt this would be one of the best books for many financial planners / students. This book explains very complex world of money and business in a simple way with the help of story from two different dads: one is rich and the other one is poor.

c) Your Money or Your Life by Vicki Robin and Joe Dominguez
The book explains about managing the resources like money and time. It shares insights into monitoring your spending and whether each of those is contributing to set goals or not.

> Is there anything else you would like to share with our readers?

A small advice for equity investors that understand the companies as our own business then take a call of investing into it for long term. Don`t follow the herd of investors but be a sound investor by analyzing the sector, company, peers and risk factors. Then wait for right price to enter and exit from that stock considering the risk appetite and set goals.

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