Investors are more comfortable with lower risk products and products which are simple to understand.

Financial Advisors Interview

On: Jan 15, 2014 | From: Brijesh Dalmia

Brijesh is a motivational and inspirational speaker in the area of Life, Leadership and Personal Development. He has transformed several lives through his coaching, workshops and keynote speaking. Till now, over 20,000 participants have benefitted from his powerful workshops and seminars.

Brijesh is the founder of 'The Brijesh Dalmia Leadership Company'. He is also the founder of 'Dalmia Advisory Services Pvt. Ltd.', which is among the leading boutique wealth management company in the country. A Founder Member and Director of the national association 'Foundation of Independent Financial Advisors (FIFA)', Brijesh also serves as a member of the academic advisory Committee of Nopany Institute of Professional Studies.

He is a CFP^CM, LUTCF and LMF. Brijesh has authored 4 books including 'A Layman's Guide to Financial Planning' published by Outlook Money in year 2007. His views and articles are regularly published by several leading magazines and websites.

He is an active member of Round Table India, a social organisation involved in community service project 'Freedom through Education'.

Brijesh enjoys reading, surfing, writing, swimming and listening to music. Tennis and Cricket are his favourite sports.

First let us congratulate you on wearing many hats – You are one of India’s Leading Advisor, CFP, trainer, writer, social worker and motivational speaker. Which hat you like wearing most? And why?

Thank you. I have enjoyed all my hats. With time there are shifts in priorities and interest. While wealth management is surely my all time favorite, creating a social impact, writing and motivating people is my new passion and I enjoy it the most.

You started your career from a small City and then migrated to a metro and now do work all across the nation. How does financial advice from Advisors vary from city to city?

Advisors are the same all across the nation and quality of advice is almost the same all across. The region worth mentioning is southern India which I think is superior in terms of the intent, knowledge and advice of financial advisors.

Indian financial advisory landscape is slowly but surely changing from product push to financial advice. What in your opinion are the factors which can really make the evolvement faster?

CFPs are better enabled to draw a financial plan since they have themselves undergone a process of doing it. However, it should not be treated as a pre-requisite for advising clients and writing financial plans or goal based plans. Having said that, knowledge and certification always helps.

Is ‘fee-based’ advice really sustainable? It seems mass of the Indian Investors are still not ready to pay a fee for financial advice. What is your take on this?

The revenue model in financial products in India is reasonably adequate even today (after drastic cuts from mutual fund and life insurance industry in the recent past). Fee income can add to the bottom line but a distributor / advisor can definitely sustain in commissions only model. Fee based advisory should be looked into only by experts in the field and who can fulfill the compliance requirement by SEBI.

Do CFPs are the only one who can draw a financial plan? Can other advisors with knowledge, experience or using tools can also do the same job?

Do you believe technology could be the next game changer in financial advisory business? If yes, how?

Well, I have been hearing this since long. I don’t think as of now we can say that technology has proven to be a game changer in the distribution / advisory business. Indian financially advisory business is very shallow and extremely sensitive to personal relationships. Technology will surely play a vital role in future but as I see it, it will take years from here if not a decade.

Most of the times, people compare financial advisors with doctors? Is it a fair comparison?

No, but it’s a close comparison. It’s for motivating advisors to think that way.

What would be your suggestion to your fellow advisors in terms of scaling up their respective businesses?

Get out of back office servicing works. Hire assistants to do this.

Meet as many clients (existing and new) as you can. Target 2-3 meetings each day.

Focus more on mutual funds. Let life insurance and products be subsidiary products.

Synergize with other market players to offer more products.

What are the common investing patterns that you have observed among the clients when you meet them?

They are more comfortable with lower risk products and products which are simple to understand. Investing is not their business and they are generally not looking for higher returns. They are ok with average returns which equal or beats fixed deposits.

Is Investor’s approach to saving or investing vary from city to city or it is same all across?

I have not done this analysis on a micro basis. On a macro basis, it’s the same all across. Rather than cities, an investors approach is more dependent on his level of knowledge and wealth he has.

What would be your advice to Investors for being a ‘satisfied’ investor?

Invest, don’t trade or speculate. Have reasonable expectation from returns. Go for lower risky products. Diversify, but don’t diversify too much. Give time to your investments

What is the meaning of long term in your opinion? When the market does well long term is defined as 3-5 years, if not so good the period keep expanding. How can you help explain Investors and Advisors the real meaning of ‘long term’?

Investing should be goal based or for wealth creation.

For wealth creation, all is required is a proper asset allocation over long term with rebalancing from time to time.

For goal based investing (which has a time horizon), it should be dependent upon the risk taking ability of the investor and a proper understanding of alternative provisions if the objective is not achieved due to bad market conditions. The cycle of the market can be longer than historical long term definition. The 'funda of 3-5 years' is sold by distributors and product manufacturers for their own interest.

Does tax planning essentially need to be a part of investment plan?

Yes.

How important is to have a life insurance plan? What kind of insurance should investors take?

Very important. Term insurance (online still better) is the best. For savings plan, balanced ulip plans should score better than endowments over 15-20 years. ULIPs must not be bought with horizon of 5-10 years.

What are the most common mistakes you have observed Investors and Advisors make?

Investors – They don’t invest with planning. They panic very soon. They don’t do due diligence of their advisors.

Advisors – Most advisors sell for earning their own bread and so even though they might have wisdom, but they sell wrong products to the right client. Further, advisors tend to take higher risk on their clients hard earned money on their own gut feeling (and for commissions). Both these things will make it tough for them to build a good long term business model.

What would be your investing mantra for 2014?

Nothing in particular. I don’t believe in yearly mantra’s. Discipline and diversification is the key.

What next we can expect from you? A new book.. A new training module? Or anything else?

Yes, I am working on a book.