``With the MF and insurance intermediaries still in the process of adjusting to the new regulations, the business environment for advisors in 2011 will continue to remain challenging,`` says Sreekant Vaithiyanathon, founder and financial planner at MoneyCare Solutions in an interview with Yogita Khatri of myiris.com.
Sreekant, B.E, MBA, CFPCM is the founder of MoneyCare Solutions, a financial guidance firm. He is also an AMFI authorized MF distributor. Sreekant is a freelance author with a few published articles to his credit. He develops content for financial institutions like MF, insurance companies etc. Sreekant is empanelled with a Mumbai based financial institute to deliver online lectures to students and investors.
> Could you share with us your background, and what led you to set up MoneyCare Solutions? What kind of business model you are currently operating in?
I basically have a business background. I started off managing my own and also my family`s portfolio. But when I looked around for unbiased and neutral financial advice, it was hard to come by. I even tried wealth management service of a foreign bank. All I found was sales pitch masquerading as advice. There were many keen to sell products, mainly to the HNIs. But no one seemed to be interested in the middle and bottom of the pyramid, especially in the rural / semi-urban areas. I had to put in a lot of effort in learning the ropes which culminated in my CFPCM certification. The crying need for objective, holistic and client focused financial guidance outside the metros prompted me to conceive and establish MoneyCare Solutions (MCS), a financial guidance firm. MCS is in to a pure advisory format and takes up transactions only if the client insists.
> What is the profile of clients that you mange today? What`s the size of the business if you define it by AUM and by number of clients and product mix?
My clientele largely constitutes of corporate employees, who can be broadly classified as mass affluent. People have the tendency to jump to financial products without any clear strategy or plan. Product selection, in fact should come after a lot of spadework, which we do for them. We hand-hold clients in all their decision and strategy making and strive to improve their overall financial well-being. As MCS has adopted a BLUE OCEAN strategy (enter untapped market space and create demand thus making competition irrelevant), we focus more on the qualitative aspects rather than the quantitative aspects of the profession right now.
> What is your view on direction of interest rates in India over the course of 2011, and which debt mutual fund products/categories would you recommend for retail investors in the current context and why?
Interest rates have gone up sharply over the past year or so in response to high inflation which, unfortunately continues to remain stubborn. I feel interest rates are now nearing their peak, with limited scope for further up-side. Investors with a clear long term horizon can lock in to these attractive rates either through bank / corporate FDs / NCDs / FMPs being offered by mutual funds, depending on their risk profile, return expectations and tax considerations. Investors with shorter / unclear time horizons can look at the short term FMPs which offer very attractive returns of about 9% now.
> Exchange traded funds (ETFs) are not so popular amongst retail investors in India. Of late, Kotak, Reliance, etc have launched gold ETFs. How good is this particular concept according to you and would you advise it?
ETF is a hassle free way of holding gold, the all time favorite investment of Indians. ETF also offer favorable tax treatment when compared to physical gold. The gold saving schemes launched recently by some fund houses does away with the need for a demat account apart from facilitating systematic investment, though at an extra layer of cost. Investors looking for convenience and do not mind compromising a bit of their returns for the same can look at these schemes.
> How do you see the business environment for advisors in 2011? What will be the key business drivers in 2011 in your view?
With the MF and insurance intermediaries still in the process of adjusting to the new regulations, the environment will continue to remain challenging in terms of improving revenues even while offering better value in terms of advice and service to the client. I feel advisors should prepare themselves for a fully fee based structure which seems to be the writing on the wall, even if the present arrangement continues in the immediate future. Poor financial awareness and low penetration of financial products combined with increasing incomes and a high savings rate of the Indian public would continue be the business driver in the near future.
> Financial literacy and customer education is seen as a step towards helping the common man take right investment decisions. Are you planning any initiative in this regard?
Imparting financial literacy is one of my prime objectives and I am already into it through my articles, presentations etc apart from blogs on my own website. Client education forms the basis of our relationship as an informed client is always easy to handle and takes up less time. Unfortunately, our education system sees no merit in imparting financial knowledge to our youth. This is one area I am working on, trying to organize short and creative programs for youth through social organizations. Another long term vision of mine is to train and equip housewives to function as the CFO who manage the family`s financial affairs even as their men folk concentrate on making money.
> What are your business plans for MoneyCare Solutions in the next three years?
My plan is to establish MoneyCare Solutions as a trusted and dependable source of financial guidance on every aspect of a clients` financial life. Relationship forms the bedrock of our service and we prefer to call ourselves as a financial guidance firm rather than an advisory firm. I firmly believe that quality will automatically bring in quantity. I am also looking at a business model that provides neutral and objective second opinion service to clients anywhere in India, as technology has shrunk geographies today. This would provide an unbiased and different perspective to their financial decisions and strategies, and more importantly help them avoid wrong decisions and the big mistakes that ruin their financials. This service can be availed right from their seats in a time and cost efficient manner even while continuing with their existing relationships.
> Is there a global benchmark for planners that can be immediately applied to India?
The Certified Financial PlannerCM designation currently being offered by FPSB India is a globally recognized benchmark that emphasizes not only knowledge but also ethics. This certification is already being adopted here in a big way.
> Any additional thoughts, comments you would like to address?
I am concerned about investors` unbridled enthusiasm for real estate today. They fear being left out of the party and seem to be taking the plunge without much clarity. The same goes for gold. Prices can only go one way, and that`s up, seems to be the common refrain. Well, we only need to look back at the genesis of the recent crises in the developed countries to learn the pitfalls of such assumptions. Investors would do well to concentrate on their asset allocation based on their financial plan rather than get carried away and go overboard with the prevailing trend.