Resource id #4Resource id #4 Advisor Interview
25 September, 2022 14:15 IST
Advisor

`Follow asset allocation for long-term wealth creation`

Source: IRIS Exclusive (22 August 2011)

`Follow asset allocation for long-term wealth creation`
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In an interview with Yogita Khatri of myiris.com, Arun Tikmani, a financial consultant and managing director (MD) at Big Bull Financial Consultancy says, ``We do not advocate much of gold as an investment. However, as an asset allocation, 5% to 10% can be allocated.``

> What is Big Bull Financial Consultancy about and what are the services you offer to the clients?

It is a private limited company, formed in 2009, specializing in mutual fund and shares, faithful to our slogan, ``Let`s Make Money, Honey``. We manage investment portfolios for our HNI investors.

> Tell us about your current business model, AUM etc. and what are your typical clients like?

We cater to a few HNI clients, invest, make money for them and share a part of the profit, towards our fees. AUM would be in the range of Rs 150 million. We have concentrated in advising & adding quality clients only, who equally believe in receiving and paying for quality advice, by way of fees and sharing a part of the profit, thus earned.

> What do you consider today the biggest weaknesses in the relationship between a client and his financial advisor?

It`s the lack of basic knowledge on the part of financial advisors, about financial products. Maximum behave like courier boys, carrying the forms, getting it signed & depositing it. That`s it. No financial advice at all. No micro and macro view. No reading habits or watching/hearing experts on TV. The only advice they give to their investor, is what they pickup from other agents and sales people, who are equally clueless and the vicious cycle continues. And when the 2008 type crisis strikes, these agents vanish and are nowhere to be seen. It`s like a heart surgeon, who, after opening up the patient and unable to handle the surgery, flee. Interestingly, they do not know the greatest investors of the world, their investing style, etc and sadly, do not even know that these great investors exist.

Similarly, the investors, flock to these agents, as they are unwilling to pay for good advices. Surprisingly, an investor does not check or ask any question to the advisor or check his knowledge about finance. On the recommendation of the agents, it`s surprising that they write big big cheques, without understanding the financial implication. The consequences - wealth destruction! As the saying goes, you throw peanuts, you get monkeys only. We would advice the investors to start paying for quality advices. There`s absolutely no free lunch.

This habit of investor is peculiar to our financial field. It`s not seen in other fields, like, for e.g. education & health. Everybody wants best school for their children`s education & consult a specialized doctor for diseases, and pay dearly for it.

Surprisingly, this looks like to be global phenomenon, with this Warren Buffett quote, ``Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.``

> What are the most important things a client should demand from his financial advisor with regard to a good investment strategy?

Wealth preservation & protection in general circumstances and then comes wealth creation. Not the other way round. Investor should taste the knowledge of the advisor, by asking some tough questions. There`s a good quote by William J. Bernstein, ``If your broker or investment advisor is not familiar with the concept of standard deviation of returns, get a new one.``

> In these turbulent times, what are the options a retail investor should look at?

In these turbulent times, a retail investor should first look at and find a good financial consultant and allow him to do the rest for him. Secondly, follow asset allocation, for long term wealth creation.

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

We are basically not into life insurance. In earlier days, we were advocating for term insurance, which was, unfortunately, not appreciated, neither by Investor nor the insurance companies` managers.

> 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.

Once you are AMFI certified, you can empanel with all fund houses. However, we basically deal with HDFC (40% AUM), Reliance (40% AUM), Franklin Templeton, DSPBR and Birla (20% AUM). Our favorite all time MF schemes will be `HDFC Top 200`, `HDFC Equity Fund`, `Reliance Growth`, `Reliance Regular Saving Fund - Equity`, `Reliance Quant Fund`. We respect all the fund managers, as they do great jobs, managing investors` money & trust. However, the favorite would be Prashant Jain, Madhusudan Kela and Sunil Singhania.

> What role should gold and gold ETFs play in the portfolios of retail investors?

We do not advocate much of gold as an investment. Great investors like Warren Buffett & Rakesh Jhunjhunwala do not invest in gold. It`s only in these turbulent times that gold has given good returns. However, as an asset allocation, 5% to 10% can be allocated.

> Taking a look into the future, what do you see as the most important trends in wealth management, especially given the background of the financial crisis?

We believe equity investment would be very important in wealth creation, provided you are in right hand. We are sure that the investors will soon realize the folly of taking advice from dubious sources and would flock to financial consultants.

> What are your business plans for over next few years? Where do you see yourself 3 years from now?

We expect grow very well in the years to come. We would like to serve & advice quality investors only.

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

There`s a good quote, ``Show me your friends and I will tell you, what you are.`` Be in the company of good & knowledgeable financial savvy friends & consultants. Have faith in `India growth` story and invest in share market, through mutual funds, as investing is a full time job. Further, we would certainly recommend them to have, at least, basic idea about finance & wealth creation, read a few good books like the classic, `The Intelligent Investor` by Benjamin Graham and `One Up on Wall Street` by Peter Lynch. Watch great investors` talk in business TV channels, like, Warren Buffett, Rakesh Jhunjhunwala, Shankar Sharma, Jim Rogers, etc. Invest wisely with an aim to protect capital. A good quote for readers to follow, by Warren Buffett - ``I will tell you how to become rich. Be fearful when others are greedy. Be greedy when others are fearful``. There is another one by Benjamin Graham - ``The investor`s chief problem and even his worst enemy is likely to be himself.``

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