In an exclusive interview with Yogita Khatri of myiris.com, Hrishikesh Parandekar, chief executive officer (CEO), Karvy Private Wealth talks about investment philosophy of Karvy Private Wealth and outlook for markets.
> In India, when it comes to wealth management and financial planning, people do lack initiatives. Why is it taking long for these concepts to gain popularity in India? How long will it take for these concepts to pick up momentum?
Most of the post-independence first generation Indians were employed in public sector and the post-retirement pension & medical facilities ensured that they need not plan their personal finances aggressively. Even the social structure of India, in which children take care of their parents in their old age, acted as a disincentive for such planning. In the last two decades however, both these well-rooted structures have changed dramatically and we are seeing or going to see the first generation of Indians getting exposed to a post-retirement situation in which they may have to fend for themselves. So, there is going to be a natural pick-up of the importance of financial planning and scientific wealth management in the coming years. This is being addressed from the supply side too with the increasing numbers of trained financial advisors coming up in the country.
Other than the above, the basic averseness to understanding financial concepts in Indians is similar to that seen across the world, and this will change as more wealth managers and financial advisors start explaining these concepts in a simpler and more practical manner.
> Most of us think that we don`t have enough money to do financial planning. According to you, is it the ``time`` or ``money`` factor that prevents people to go for it?
No amount of wealth is too less not to plan for. Each rupee of wealth earned is done through your hard work and it is your responsibility towards your family to plan your wealth in a diligent manner. Neither is it the `time` factor as one can always find time for important things in life if one tries to. Basically, if people are made aware of the difference in wealth that you may end up with if you plan well versus what you may end up with without planning, the yawning gap between the two will compel you to take the path of structured financial planning. Also, as I mentioned above, the Advisor community have not helped so far by making matters more complicated to understand with arcane terminology and opaque practices. If ever there was a need for simplicity of communication in any field in India, it`s in wealth management and financial planning.
> What according to you is your USP vis-a-vis other players? Where do you see yourself 3 years from now? Any new products from your basket?
Karvy Private Wealth pride on ourselves possessing a unique and almost paradoxical combination of being an unbiased advisor with no affiliation to any one insurance company & not having any in-house mutual fund, while at the same time, benefiting from the amazingly wide array of businesses that our parent group, KARVY is in. Be it stock-broking, mutual fund distribution, insurance broking, commodities broking, realty or NBFC - HNI clients of Karvy Private Wealth benefit from access to any of these services being provided through our sister companies. In addition to our Group companies, we have also set up a powerful web of allied advisory relationships and hence are able to offer a plethora of integrated services to our Clients.
We definitely see ourselves as one of the top 3 players in the wealth management space in some time from now, and establish ourselves as the advisor of choice through high-quality advice and best business practices.
We have stream-lined our services for the mass affluent segment and are now offering distinctly defined services for getting a comprehensive wealth review done, or a comprehensive financial planning done, a risk management exercise or a home re-financing executed.
> What have been the positives/ drivers of your acquisition of Park Financial Advisors?
We acquired PARK Financial Advisors for three distinct reasons and in decreasing order of importance they were - quality of founders who joined our senior management team, learnings acquired by them from running that business and finally the set of Clients & AUM that we got along with the company.
These drivers of the acquisition have been vindicated ever since and we believe that this is one of the key factors in helping us accelerate the roadmap of Karvy Private Wealth by almost 9-12 months. We have set up our processes and systems in record time, merged our existing Private Clients Group & Karvy Financial Planning Group along with PARK, brought in quality senior management and have hired 50 high-quality people - all in the past 6 months !!
> What is the investment philosophy at Karvy Private Wealth? How do you plan to strengthen the development of advising and managing wealth of HNIs globally?
Our Investment Philosophy revolves around the principle of ``n=1``, where n is the number of clients who fall under any one bucket of advice. Essentially, we treat each client`s financial circumstances as a unique one and though the overall approach remains the same, the Advice for each is unique. We have a bouquet of Asset Allocation portfolios, depending on level of risk taking ability and composure of the clients. This is almost a starting point and then, we tailor-make the exact tactical overlay for each client. On the philosophy itself, we do not adopt a passive approach to managing your wealth and at the same time, prevent you from making too frequent changes or indulge in pure speculation. Indian markets like other emerging markets are full of events and we think we understand the macro-factors behind these well enough to advise our clients in the most optimal way.
> What is your view on the current market scenario? What are the risks an investor should look out for in 2010?
We are optimistic on Indian equities in the medium to long term. There could be short-term volatilities in the coming months, but we are advising clients to buy on dips. Having said this, I do not tire from repeating my `stick to your asset allocation` pitch to clients of all hues and this will make questions such as the above largely redundant.
One of the key risks in 2010 would be getting caught on the wrong side of some short-term corrections, which may get sparked off when the liquidity measures are eased off and rates start to harden. Another would be to get saddled with some high-cost real estate and stare at lower prices for some years - hence, I would recommend to invest in this sector with eyes wide open and selecting `value investments` rather than participating in mass drives.
> Talking about the rising shine of yellow metal, don`t you think that gold prices have touched a historical high and investors should wait for a correction?
Well, even as we speak, the global commodities gurus are forecasting a USD 1500 / ounce level and some even higher than that. Macro-economic conditions in the next 6 months and our expectations of how policy makers will play it out suggest that there may not be corrections in the shine in this period, but beyond that, we will have to form a new opinion at that time.