Resource id #4Resource id #4 Advisor Interview
17 April, 2024 14:28 IST

`Reduce equity allocation & add more debt into portfolio`

Source: IRIS (31 January 2011)

`Reduce equity allocation & add more debt into portfolio`
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In an interview with Yogita Khatri of, Partha Iyengar, Founder & CEO, Accretus Solutions says, ``It`s high time there is a regulation for advisers in the country! I hope the PFRDA recommendations on common minimum financial standards are implemented for advisers at the earliest.``

Partha Iyengar is the founder and chief executive officer (CEO) of Accretus Solutions, a firm dedicated to providing fee-based wealth management solutions for affluent resident and non-resident Indians. Partha Iyengar has a decade of experience in financial services focusing exclusively in advising clients on wealth creation, preservation and management strategies. Partha is passionate about financial planning and wealth management for individuals. Partha pioneered a proprietary fee based financial planning practice in 2003. Partha initiated joint venture project for wealth management with few international firms in U.S.A. Partha has been featured in leading business journals like Business Today and Economic Times. He has also co-authored an article for `The Week` on `The Science of Portfolio Diversification`. Prior to Sharekhan, Partha had stints at Edelweiss, Way2Wealth and ran his own wealth management consulting firm.

> Can you please tell us about `Accretus Solutions India`? What services do you offer?

Accretus in latin means `to grow or increase` gradually. We believe in this philosophy firmly and our approach to managing wealth for clients very much reflects this philosophy.  Accretus Solutions is a new generation financial services firm focused exclusively on providing fee only wealth management and financial planning solutions for affluent resident and non-resident Indians.

> Are clients clear in their goals? What steps do you take to bring clarity to their goals?

Pre-dominantly clients have a broad picture about their financial goals but they tend to focus a lot on `returns` and `market timing`. Our initial meetings with clients sets the framework for `goals based investing` approach as well as educate and empower them through various tools, resources and case studies to help them focus on goals driven approach to investing rather than `returns` oriented approach to investing. Once they are clear and bought into the idea of benefits of goals based investing, we start work with them.

> Government mulls strict norms for wealth management advisors followed by the recent fraud case in a bank`s wealth management unit. Do you think stricter norms will help? How do you see the business environment for advisors in 2011?

Yes! It`s high time there is a regulation for advisers in the country! I hope the PFRDA recommendations on common minimum financial standards are implemented for advisers at the earliest. Advisers are gradually realizing that the way forward is to add value to clients through un- biased advice and charge fees to clients. I believe advisers need to look beyond product sales and focus on solutions driven approach to help clients achieve their financial goals.

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

Clients are gradually moving away from discretionary PMS to non - discretionary PMS. This trend is global, post- Lehman crisis in 2008.

Sudden wealth in urban and rural areas (through floats, sale of land, etc) presents increasing opportunities to reach out to more clients. Banks are increasingly realizing the potential of fee based income.

Technology platforms are increasingly becoming crucial to serve clients better.

A transformation from product centric approach to client focused approach is emerging with the decrease in product commissions, clients increasingly accessing the internet for more information and increasing global travels leading to better exposure on the global practices.

These key trends should help transition advisers from a commission based model to fee based model. Most importantly, advisers should focus on holistic approach to wealth management for clients.

> People are worried about a stumbling India growth story, about high inflation, high deficits, FII outflows etc. What is your market outlook for 2011?

India today cannot be seen in isolation. We are very much globally aligned - be it financial markets or economy. Apart from this, geo-political factors increasingly impact the market. With high inflation and increasing interest rates, the stock markets in India could be volatile and the FII inflows in the near to medium term does not look positive.
Under these circumstances, we do not expect equity markets to perform well.

We believe the investors have to reduce their equity allocation and add more debt (with short term maturity papers) into their portfolio. However, a significant correction in equity markets gives an opportunity for investors to buy or accumulate stocks in their equity portfolio.

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

Our business model is a fee-only model. Hence we are not associated with any product manufacturers.

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

We focus on both qualitative and quantitative aspects while recommending mutual funds for clients. For eg. on qualitative aspects - we look at fund house credentials, fund manager`s credentials, is the fund house system and process driven, are the funds consistent in their investment objective, style, do they take pro-active approach to steer portfolios by factoring global/local events, the age of the scheme, etc. On the quantitative side - apart from returns over various time horizons, how did the fund perform during various downturns, closely examine the portfolio - the company`s/promoters credentials that the fund has invested in, risk-return consistency, etc.

Since our approach is goal oriented and tied in to their risk profile, we do not have any preferred funds for recommendation.

> 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.

Since we follow a fee-only model, we do not deal with any fund houses. Our clients execute all of our recommendations through their preferred online or offline channels.

> What`s the one thing that you would change in the financial services industry, if you had the power to make that happen?

`Fiduciary Responsibility` mandatory for all advisers/institutions. The highest standard for financial services that would protect, educate and empower investors.

> Going ahead, what are your plans? How do you plan to expand your business?

We have embarked on a new initiative of reaching out to mass affluent clients through ``Financial Wellness and Wealth Planning`` sessions at corporations. The young population in our country have to be financially aware, specifically women. With changing social dynamics, it is important that women are financially aware and are involved in financial decisions that not only impact their families but also themselves.

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

We believe every investor has to take active part in their finances. They need to invest their time regularly and consistently to educate and empower themselves. Do not trust everyone on face value. Please take the effort to read offer documents or product literature, question and understand before investing. Give time to investments and focus on goal based approach to investing. This helps in taking away lot of stress associated with investing. Most important, maintain records of your investments and do not sign blank documents!

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