In an interview with Yogita Khatri of myiris.com, Lokesh Jain, corporate trainer and independent financial planner says, ``The very basic of financial planning process is to know your financial goals. If you don`t know your goals and if you are not working for it, then your money is working hard for achieving other person`s goal.``
What led you to enter into financial planning and corporate training profession? What services do you offer?
I am into financial services and the advisory industry since the last nine and half years. The last company I worked for was Bajaj Capital, heading their financial planning division for the western zone. During my tenure with Bajaj, I got an opportunity to work on all the aspects of financial service industry. I started my independent practice at the end of year 2007. Right from the beginning, my focus was to concentrate on financial planning fee based advisory and training. In my opinion, training and practice go hand in hand. Currently I am into trainings and fee based financial planning practice.
Tell us about your current business model, the kind of clients, AUM etc. How has been your journey so far? What are some of the challenges that you faced?
I spend 75% of my time towards training and 25% of time towards practice. It`s a great experience to be part of the industry and to get an opportunity to interact & understand the various perspectives of the financial planning and wealth management industry. Having worked with bankers, financial planners, MF IFA, national distributor, insurance agents & brokers, investor etc, has given me broad understanding of the financial planning industry at present and how it`s shaping up in the future. It`s almost a decade; I have spent in this industry and seen a couple of stock market cycles, regulatory changes, scams, and various other aspects. I am very optimist about the financial planning industry and I am sure it will grow 5 times in the next 5 years. So as the industry grows, we being a part of the industry surely will grow together.
How does a small retail investor protect himself against the volatility in the equity market?
The proven way to protect the investor from equity market volatility is to do systematic investment. And over a period of time, investors have understood the importance of the concept of systematic investment plan (SIP). Now people are moving from systematic investment to value investing i.e. value investment plans (VIP). Following basic concepts will help retail investors not only to create wealth but also to reduce the risk, substantially.
With so many investment options, how does a small retail investor select where to invest his hard earned money?
There are plenty of choices for retail investors. But many of the products help investors to achieve their financial goals and few of them help the institution or product seller to achieve their own financial goals. Here the notion ``Let the buyer be aware`` is very true. Before getting into any financial commitment or investment, understanding the product is very important and matching it with your investment objective. Two approaches need to be avoided. CTR C + CTR V approach, which is like someone else is doing it, let me also do the same. Second one, advertisement or someone else is deciding what we need to buy. Financial products are very different than FMCG or any other products. Apart from money, investment requires your time and efforts to buy as well as, manage it. Giving your time and efforts before buying a product will help and protect you from buying the wrong product.
What is the ideal asset allocation that every small retail investor with very low risk profile must have?
Assets allocation is a subjective ratio differing from one individual to another. Ideally, your first investment should be in your contingency funding, amount required to take care of your day to day and emergency needs. Then pay for your insurance and risk cover. And then rest of the money can be allocated as per your financial goals. It`s like getting into a train and asking yourself which station you would like to get down at. Not everyone will be ready to travel till the last station. So before investing and allocating money in different assets classes, you should ask yourself when you would require this money. And compare it with end value of financial goal. And here the notion risk - returns plays an important role. Where ever you expect higher returns, it comes with higher risk but simultaneously higher risk wouldn`t necessarily come with higher returns.
How can small retail investors protect their interests and money while investing in MFs?
It requires time, efforts to earn money but few seconds to spend it without thinking about it. We have the best of the regulator, competitive financial institutions with loads of product choices and all the sources to explore the information about the product. But still penetration and investor protection is a major issue. We can`t expect that the people will immediately start investing in MF and no one will face mis-selling. It` s all about ownership of your hard earned money. The moment we start making a decision while keeping in mind that `it`s my money`, I am sure no can make a fool of us. The very basic of financial planning process is to know your financial goals. If you don`t know your goals and if you are not working for it, then your money is working hard for achieving other person`s goal.
How many life insurance companies do you deal with? How much is the whole insurance business in your total?
I don`t deal with insurance companies. But yes, we do recommend insurance to clients as per their requirements.
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.
I don`t deal with fund houses directly. Being into financial planning, there is no love and affection with a particular fund house or a scheme. It`s the client` s financial goals and needs which play a vital role in the selection of product, best suitable to him. Our belief is that fund management is an art, so every entity in this place has its own niche. Every product has its target audience, and we should try to match it with the client`s needs. Favoritism spoils the basic objective of that product.
What are your business plans for over next few years? Where do you see yourself 3 years from now?
We will continue to work on the same model and interact with the end consumer with all the channels available like web platform, mass media, electronic media and workshops and we will share the real financial planning issue with them beyond just investing their money.
Is there anything else you would like to share with our readers?
In the times of overload of knowledge from all the sources, it`s important for us to keep it simple. So the guru mantra for a successful financial planning in an individual`s life is to keep it simple, which is very difficult though.