Resource id #4Resource id #4 Advisor Interview
22 May, 2024 11:18 IST

`Financial advisory has great future ahead`

Source: IRIS Exclusive (01 August 2011)

`Financial advisory has great future ahead`
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In an interview with Yogita Khatri of, Abhishek Marwah, founder & CEO, Marwah Financial says, `` I do not see any positive impact on distributor income by charging a transaction fee from investors. In fact, the existing investors might be neglected by some for adding new one to earn this income especially by distributors in small cities.``

> Tell us about your background and what led you to enter into financial planning and wealth management profession?

I come from a middle class background and my father was a banker. I have done many professional certifications in financial markets in equities, derivatives, commodities, financial advisory, etc. I am a certified professional financial advisor (CPFA), NSE certified market professional (NCMP) and AMFI certified mutual fund advisor. During my graduation days, I noticed that the financial services was/is the sector prone to hard selling and mis-selling, and it`s a service which everyone needs from a service class employee to a high net-worth investor (HNI). I could immediately spot an opportunity to create a customer-focused and service-oriented firm in the sector. I founded Marwah Financial in 2007 to offer affordable and authentic investment advice. Financial advisory has a great future ahead. The industry off late has started to move from a sales oriented to advisory oriented industry. The importance of financial planning cannot be ignored in these times of volatile markets and economic instability. Nuclear families, rising inflation, education and medical expenses, uncertain retirement benefits, volatile returns from asset classes, uncertain career paths and greater life expectancy levels just highlight the need to plan your finances even more.

> How has been your journey so far? What are some of the challenges that you faced in the initial years of your startup?

My journey from developing interest in the financial markets to setting up my own company has been very satisfying yet extremely challenging. Any new business goes through a lot of challenges from arranging finances to having the right people on board to creating a niche and acceptability for the products and services. But in fact all these challenged and overcoming these challenges is what makes the whole experience extremely satisfying. During my journey, I have formed important partnerships, created a qualified and competent team of people with professional and educational backgrounds in financial markets; I have set up the required systems and procedure in my organization to make it customer centric and operationally efficient. Right now my biggest challenge is to build a team of passionate and capable people to take the business on to the aggressive expansion path.

> Tell us about your current business model, AUM etc. What are your typical clients like?

The essence of the business model is providing financial planning and wealth management advice rather than just selling financial products. From day one, we were very sure that we do not want to become just a run of the mill brokerage company. The revenue model is based on advisory (wealth management, financial planning, personal finance etc) and services (brokering, third party products like mutual funds, bonds & IPOs, corporate FDs etc). We have 500+ clients. We have both domestic and NRI clients but our primary focus is Delhi/NCR. We focus on executives working in the corporate sector as they understand and value the importance of professional financial advice.

> SEBI has introduced a transaction charge of Rs 150 for new investors and Rs 100 for existing investors for mutual funds to incentivize retail distributors. Do you think it is a step in the right direction for industry as a whole? Why/why not?

I do not see any positive impact on distributor income by charging a transaction fee from investors. In fact, the existing investors might be neglected by some for adding new one to earn this income especially by distributors in small cities. In city like Delhi, the shift to online platform for investing in mutual funds can increase now. The need of the hour is not giving incentives but to make this industry more professional that can only be done through updating, educating and making the IFAs technically sound.

> With interest rates rising, what opportunities does the debt market offer to investors?

Short term debt funds are doing well and it is a good opportunity to make money. Investors are looking at short term funds because FMPs has direct tax issues. Given concerns around inflation, monetary tightening, short-term funds may perform well on a risk-adjusted basis.

> What to expect from a financial planner? What are the factors one should look for before choosing a financial planner?

A financial planner takes into account client`s current financial situation and life goals before giving any advice. He is neutral to any products and his interest lies in solely meeting your goals. Hence, a true financial planner should be able to give you a blueprint of your financial life. Although there is no pre-defined criterion for choosing a financial planner but one must research well to find the right one. Check on credentials, like certifications. The fee structure also gives you a good idea how your planner is remunerated. Finally affiliations with any organization or company should give you an indication of the advice your planner is going to give. You can also speak to some of your friends who have hired any financial planner or existing clients of the planner to get an idea on the dos and don`ts of analyzing the services of a financial planner.

> How do you go about constructing/preparing a financial plan for your clients? What continued services do you offer after the initial plan?

We follow a defined process for advising to our clients and have tied up with well known CFPs for constructing a financial plan. The process starts with signing an engagement letter for getting the client`s consent for starting the FP process. After collecting the data, we give it to the professionals who analyze it and prepare the financial plan, which we recommend to our clients. The whole process is very transparent as the client knows at every stage what we are recommending and the reasoning behind it. After the initial plan is prepared, we give an option to the client to implement through us. If the client wants to implement the financial plan with us, we offer our service, where in we manage our client`s portfolio and recommend any rebalancing, if required. Also the financial plan is reviewed periodically to make sure that it is working towards its objective.

> In the current market environment, what should be the ideal portfolio for a person with high, medium and low risk appetite?

For long term investors I do not think there should be any change in their investment strategy. As we have been recommending to our investors, have maximum equity allocation for wealth accumulation and realign portfolios when nearing your goal achievement. A periodic review should be done to rebalance if required. However, for low risk appetite investors like the retirees, FMPs and MIPs are good options at present. Since interest rates are rising, debt market is giving good opportunity to investors to earn safe and steady returns. For us, there is no ideal portfolio. We do a goal based planning and hence design portfolios as per the analysis of client financial situation.

> What does money mean to you?

Money for me is like the freedom to have and pursue things which are important to me. Money is the freedom to pursue a hobby, travel to places and own things which makes me happy.

> What are your business plans for over next few years? Where do you see yourself 3 years from now?

I would like to have physical presence across Delhi/NCR and may be some other metro cities in India. I would also like to create an online model for personal finance and financial planning. Three years down the line, I would like to see Marwah Financial as a brand for authentic and affordable financial advice, enabling wealth creation for all our clients. Trust is the key to our business; I aspire to build a preferred and a trustworthy brand and reputation in the market.

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

I always say that investing and creating wealth is a long term exercise. Value investing holds its relevance in all circumstances. One needs to have a strategy and procedure in place and stick to that strategy over a longer period.

``Failing to plan is planning to fail`` - sums up the role that financial planning can play in each of our lives.

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