Resource id #4Resource id #4 Advisor Interview
25 May, 2024 17:49 IST

`Financial planning as a concept is still virgin`

Source: IRIS Exclusive (30 August 2011)

`Financial planning as a concept is still virgin`
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In an exclusive interview with Yogita Khatri of, Padmanaban Balasubramanian, director, Fortune Planners says, ``Don`t close any SIP (SIP is like a tree, don`t cut the tree at any cost, whenever the market is good take fruit out of it) just because of last one year return is still negative.``

What led you to enter into the financial advisory profession? How has been your journey so far?

I started in the year 2003 itself, but I was a part timer initially, and I strongly believe that everybody works for money and when it comes to protect or manage money the individual feels that it is somebody`s job. Since, I have reasonable contacts, thought I could narrow the gap, if I am a full timer. I am a Post graduate in Physics, I don`t have any academic qualifications on finance, so I started clearing NCFM module and I have cleared 8 modules in early 2009. I feel some professional qualification will be handy in a longer run so I did my CFP in June 2009. By the time, I have decided to be a full timer the entry load was abolished and I feel that even though everybody were affected by this move, one good thing is now we have a level playing field and only the serious advisor stays and the competition is reduced to 20% from 100%. I believe the saying, ``When the going gets tough, the tough gets going``, now I am used to this environment and it is manageable now.

Tell us about your current business model, AUM etc and what are your typical clients like?

I feel that the financial planning as a concept is still virgin and the investors don`t feel the importance of financial planning, hence they are not ready to pay anything as far as my client profile is concerned. I don`t have any HNI clients so far, most of them are salaried class. I am a full timer, since January 2010 and my AUM stands at Rs 35 million as of now.

What do you consider today the biggest weaknesses in the relationship between a client and his financial advisor?

Most of the clients are coming for mutual fund via SIP route, just for saving something without attaching any purpose or goal to it, so their stay is very short which is less than 3 years in general. Basically, educating all my investors to look for a long term to create wealth and now three AMCs have already come out with goal oriented schemes. I think it will take some more time to get synchronized.

What are the most important things a client should demand from his financial advisor with regard to a good investment strategy?

1. Client should tell what exactly they want, so that they can ask the advisor to customize their needs.

2. Client should ask for quarterly consolidated statement to monitor their portfolio.

3. It is after all clients` money and the advisors are only facilitators; so they should demand for yearly review. Investors should consider this as a profession and need to be pay professional fee.

4. Client and advisors are like partners - to meet the investor goals in their life over a period of time, the bonding is important.

How many insurance companies and fund houses do you deal with? How much is the whole insurance and mutual fund business in your total?

Personally, I don`t have any insurance license in my name and I strongly believe that the term insurance is the real insurance one should look into, yet the clients are not willing to understand or if they understood also there is a sentiment to continue their old policies. So far am getting only one policy per month at an average hopefully people will start realizing soon. So the insurance part is very negligible as on date.

How important is marketing in an investment advisory firm, according to you?

I as an individual do not carry any brand and it creates more time to create a brand for oneself. My marketing is mostly on referral mode, but referral takes more time and it is one by one.

What role should gold and gold ETFs play in the portfolios of retail investors?

Personally I am not in favor of gold and more importantly any commodity can have sustained growth only. Having 10% to 20% allocation in gold is desirable because of the recent movement and unanimously all the clients accepted the gold savings fund in a big way.

In these turbulent times, what is your advice to investors?

Don`t close any SIP (SIP is like a tree, don`t cut the tree at any cost, whenever the market is good take fruit out of it) just because of last one year return is still negative and if you have money add slowly to balance the negative value in SIP. If you have a bulk amount use STP, especially flex STP to get the advantage of market volatility.

Taking a look into the future, what do you see as the most important trends in wealth management, especially given the background of the financial crisis?

People have all the education and they lack financial education, if I want to use the laptop I should now some basic stuff and I don`t need to know all the languages or programming skills to operate. All are struggling for years to create wealth, if they have some financial education they can manage better. The beauty and the uniqueness of the IFA (individual financial advisor) is unbiased recommendation and there is a personal touch and most of the IFAs are dedicated to their profession unlike banks and other NDs. The investor finding it difficult to contact the one who recommended some products earlier, because the persons keep on changing very frequently and it is always driven by pressure to push some products. The clients will ask 1,000 questions to the IFAs and they will not ask a single question to the banks and blindly sign wherever asked to sign and people started realizing their mistakes. So to me future is looking very bright for serious IFAs, irrespective of the regulations.

What are your business plans for over next few years? Where do you see yourself 5 years from now?

Right now I am operating from home and planning to take up a small office in a month or so that gives some visibility and professionalism. So far the capital market has not supported our business, and in a 5 years` time, the market will also support in a big way to grow much faster. If you look at my portfolio, I have 20% goal oriented investments and remaining 80% investments are just to save, not goal oriented. Hopefully in a five years time it would be the other way round and am striving hard to educate them for a goal based investments and I am sure I will succeed in this.

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

As I have already pointed out to some of my answer earlier, we as an advisor or a facilitator would make investor decision much easier but the onus is always on the investor. It is their hard earned money, so they should do some homework like - why do you want to invest and what do you want to achieve over a period of time. You should ask questions and evaluate your advisor because he is the captain of your financial ship and check his ability before you hand over financial management. Medias and newspapers will always tell you who are the best, as on today, but the investor need financial consultant to hand hold of their portfolio and for that they have to pay some professional fee. The period between 2011 and 2020 is the golden era for diversified mutual fund investments, don`t regret for not participating in this journey.

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