In an interview with Shweta Dhoka of Myiris.com, Ashutosh Tembe, Financial Planner at Orchid Financial & Investment Planners, says, ``Keeping all your money in a savings account is very secure, but it also has incredibly low returns.``
How did you start as a financial planner? What services do you offer?
I had been keenly interested in financial planning. Initially i.e. from 1979, I started life insurance consultancy as well as business and from year 2008. I had been empanelled mutual funds` broker. However, during my consultancy endeavor, I found something amiss in so far as I was unable to set clear financial goals for my clients convincingly. Mere selling of insurance policies and mutual funds with my working knowledge was found inadequate in setting and achieving financial goals.
Meanwhile, I came across an e-mail suggesting to undergo FPSB India's Financial Planning Course of one year with different pathways. I was under the impression that this course will provide training in financial products but when I started attending various modules, I found it was much more useful than what I had anticipated. Hence, I joined CFP course and completed in the stipulated time frame. After completing the course and with the given level of knowledge, I am now confident enough to advise my clients on financial planning taking into consideration all relevant factors such as their risk appetite, priorities in reaching goals, etc.
As regards my services, I provide all relevant and necessary services to my clients such as advising them from time to time, satisfying their queries, educating them about prevailing trends in market, new products available for fresh allocation or for rebalancing the portfolio.
What is the AUM that you have now? How has the last year been in terms of client acquisitions and AUM growth?
I manage around Rs 200 million AUM under mutual funds, around Rs 15 million under fixed deposits, and around Rs 20 million under direct equity so in all Rs 240 million AUM. In terms of clients, I could add 20 new clients for investment & financial planning which indicates the growth around 17% over year on year basis on fee and commission basis.
How would you differentiate your services from that of competitors? Do you think there is enough potential in this wealth management market to sustain as many players?
There could be competition among corporate & investment companies to sell their products. But I sincerely don't see any competition among individual wealth managers/IFAs; their business is fundamentally based on their contacts and services they provide. Moreover, each one develops his own strategies to win confidence of clients through personal & prompt services.
There is basic difference between the working of individual wealth manager & corporate. Most of the corporate and HNIs are provided services by their bankers. But one major limitation is that the relationship managers appointed by such corporate agents may not be able to provide personal services and proper guidance. It might lead to communication gap and hence, the client may not be satisfied with their services.
Therefore, I feel there is vast scope for individual wealth managers, as they can take responsibility of managing investments, and other financial activities.
Secondly, today it is a known fact that most of the youngsters and working couples are not able to spare any time even to think about investments, investment planning, forget about financial planning. In my opinion, presently, the need for financial planner is inevitable and in coming years investors would realized it starkly. Here, I would also like to draw attention to one important aspect that is, SEBI has started tightening the norms for financial advisory business both for individual and corporate. Similarly, IRDA has also started adopting new norms for Insurance advisers; in view of the aforesaid, I feel in ensuing years, the position of financial planners would be indispensable.
Gold is in a bull market for ten years now. So an increasing number of people say it is in a bubble. Your comment?
In Indian context, gold has emotional as well as traditional value rather than investment value. The gold ornaments is called 'Stridhan' which most of the families transfer to next generations during wedding of both son as well as daughter. We hardly see any one selling gold stock or ornaments just because the value of gold has risen to its top, and that`s the reason we see more demand in India. Hence, I feel even if price rises Indians won`t stop themselves from buying gold; most of the Indians hold their wealth in this form. But I always suggest my clients to hold at least 10-15% of their saving/investments in either gold ETF or MF units (gold funds); price variation in this investment is negligible say 2-3% max.
How does the global investment environment look year ahead? Your advice to retail investors?
I have already mentioned about unhealthy global scenario. However, considering the huge population of India, which is likely to turn out to be the largest working population in the world, I believe that India will be the the main player in global economy in future.
As regards inflation, food inflation has not yet reduced to comfort levels and I don’t think it will come down near future. On the other side, government has started reducing subsidies without matching the other ends of chain.
About FDIs inflows, which we have witnessed recently after policy reforms, would help towards developing economy. India has been able to maintain the growth rate even during the global slowdown. In growth rate, India tops the world just below China and which is commendable. If we compare these two economies, India is likely to supersede China since India is a democratic country which brings more transparency in trades.
Is there some thing that you would like to share with us?
Basically our young generation which is qualified, earning satisfactorily assisting their parents in managing monthly outgo, they should start investing in markets. Normally we see such earning members are influenced mostly by their parents who have crossed their 50s hence they naturally advise them to invest in bank RDs/ FDs which earns hardly 7-8%. Keeping all your money in a savings account is very secure, but it also has incredibly low returns. I feel we there should be awareness programs at the school/college level itself, so they can be updated with the knowledge of investing v/s savings.