Resource id #4Resource id #4 Advisor Interview
25 September, 2022 13:50 IST
Advisor

`Financial literacy in India is still close to zero`

Source: IRIS (23 February 2011)

`Financial literacy in India is still close to zero`
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In an interview with Yogita Khatri of myiris.com, Vishal Pandey, Director, VP Wealth Management says, ``Everybody is `interested` in having a great financial life, but almost no one is `committed` to have a great financial life. A financial planner`s job is to just change their interest into commitment, That`s all.``

> Could you please tell us about VP Wealth Management? What prompted you to take up a wealth management business? Tell us something about your experience.

VP Wealth Management is one of the leading financial planning services providers in India with a team of experienced & qualified financial planners who guides you to think ahead and reach ahead in life by offering systematic & ethical financial planning solutions. Currently, we are operating from HO, in Mumbai, managing team of CFPs, franchise & also sub-brokers. Our investor consists of individuals, families, HUF, corporate, trusts, & many industrialists & celebrities. I have been in this MF industry for more than a decade. Most of the time I have been associated with manufacturers & worked with brands like DSPML (Now DSPBR), Kotak , Bajaj Capital & Citibank. Having urge to do something really big is that space was not possible by working for some company or only with one product. The demand for financial advisory is immense & there is huge gap in the industry between sellers & advisors. In fact there are hardly any advisors. Also this profession is very NOBLE, as you help an individual to achieve financial independency. Actually I have realized that it is more of a passion, which is making me to make a mark & going forward you will see the same in the entire team as well as in our investor & vendors.

> Ever since the entry load was abolished, the inflows into MFs have not been encouraging. How long will it take to stabilize?

Abolishing entry load is a revolutionary regulatory change that has taken place. The word change is very important as it is constant. It is very painful initially. The industry was working on some business model & had done their growth strategy, both short term & long term based on the same, which went for a toss all of sudden. Also, still financial literacy in India is close to zero, so every financial product here is a push product. So having minimal or no incentive on any such product gives a setback to distributor of the same. But, sooner or later, everybody will realize the importance of MF as a product in overall investment basket. Any advisor who is serious in this space cannot afford not selling MF, also any investor can`t do the same in his portfolio. So there will be consolidation, which has already happened, industry saw negative inflows for some time for which reasons could be many like markets, sentiments or etc but there has been positive numbers from January onwards, & pick up gradually going forward. SIP are getting popularize every day. Distributors & investors too have understood importance of the same. With time it will catch more fire. So, it`s a long way to go. However, manufacturers & regulator should put emphasis on investor awareness. Reach, penetration & visibility are all very important drivers for this product.

> How do you deal with market downturns, how do you help clients deal with such downturns?

We are into financial planning space. So actually markets really have no very negligible role to play in our domain. We construct customized plans for investors & also execute the same. At times we also give E-opinion of other financial planners. This unique model is practiced by very few in the industry. You see, there is only thing which is certain in life & that is uncertainty. So planning or preparing for that uncertainty is the role of the advisor. Also, we try to chase returns, but that is not true. We have to believe in concepts. Everybody is `interested` in having a great financial life, but almost no one is `committed` to have a great financial life. A financial planner`s job is to just change their interest into commitment, That`s all. Actually, this is how it should be practiced. Because the basic attribute of market is, it has to go down. So whenever, the planning is done, the same is already considered. The ultimate objective is winning the war, not all battle.

> Reliance Mutual Fund (MF) has launched systematic investment plan (SIP) in gold through Reliance Gold Savings Fund. What`s your view on the same?

It is good asset class of investments for any investors. Gold, real estate, gilt & equities are the 4 major component of investment. It is one of the cheapest ways to own gold. There were few controversies on this product from costing, saying that because it is FOF, there is additional recurring expense for the scheme. However, if you consider buying the same through ETF there, is brokerage to be paid for demat & brokerage house, so it far cheaper if you compare all the cost involved. Also, the outlook for gold remains very bullish. Uncertainty across the globe is making everyone to invest in some asset class which will not lose its value comparatively. There can be some volatility in short term with regards to dollar moving either side, but as said before, if it has to chosen as an asset allocation for long term, we should not chase returns, because gold cannot be compared with equity, gilt or real estate.  First time, such facility has been provided to invest in gold. Kotak has already proposed its launch from 1st week of March. So, this trend will continue for long now in the industry from others too.

> What kind of funds will do well considering the current market environment?

Interest rates are towards peak. There is liquidity crisis across the globe. Inflation is all time high. There is political uncertainty in India with global recovery. Oil is also concern with other commodity prices. The shorter yield curve may see some easing with expectation of liquidity coming. Short term bond funds, dynamic bond funds & FMPs & FDs are good option to invest in such markets. If we get some good yield for longer period it should be must BUY product. Ex. SBI bond which will closing recently 9.95% for 15 years is something you will not see in near future.

> How important is marketing in a wealth management firm? What kind of marketing do you think works?

Marketing is very important for any business. It is more of a process & has to be developed.

1) Social Sites (Facebook, Linked in, Twitter)
2) Online Marketing (Google SEO)
3) PR (Writing articles)
4) Advertisement (Financial journals, research sites, newspaper)
5) Reach (Emailers & SMS Campaign)
6) Recall (News paper insertions, corporate presentation, society activity, schools & many more)
7) Referral Networking

> How many life insurance companies do you deal with? How much is the whole insurance business in your total?

We deal with all life insurance & non life insurance companies. The business or advice will purely depend upon the need of the investor.

> How many fund houses do you deal with? In which fund house do you have the maximum AUM (in terms of percentage)? Tell us your favorite all-time MF schemes and fund managers.

We deal with all fund houses. Not very specific with companies or fund manager because we believe in more of systems rather than people. So any fund house, which is system driven, we recommend investors those.

> What are the biggest opportunities you see for financial advisors over the next 5 years?

Awareness of financial planning space will make some pull for the product. Elimination of many non serious advisors will make left out investors to coming to serious & quality advisory. India growth story will create huge new breed of investors & their surplus funds to be invested. Government policies will also facilitate investments.

> With the budget around the corner, what kind of reforms are you expecting in the personal finance area?

This budget is expected to be very passive. Election round the corner, crisis is the country, opposition on roar with criticism, has not left government for any options.

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

``In all realms of life it takes courage to stretch your limits, express your power, & fulfill your potential... It`s no different in financial realm...``

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