We are an emerging economy and our industry is at a nascent stage. While in the developed economies, it is already accepted as a serious profession..

What are your views on the current state of awareness on financial planning in India?

I think that awareness levels are certainly limited and underpenetrated, especially in territories where I operate. Acceptability of financial planning with fees is limited. I feel that AMCs and regulators can play a much larger role in increasing the awareness about financial planning. Few AMCs have taken initiatives in this direction, like; DSPBR has initiated an investor education series Plan F that is aired on CNBC TV 18 every weekend. IDFC AMC has created a short movie “One idiot” which is part of their investor awareness campaigns. I guess, we need to create awareness amongst the retail masses to leverage effective gain.

Do you think that the need for financial planning in India is different compared with other countries, especially in the developed world?

Yes, we are an emerging economy and our industry is at a nascent stage. While in the developed economies, it is already accepted as a serious profession. Ours is a very fragmented industry at present, and we are in the process of evolving into a matured industry.

How long have you been in the financial advisory industry? During this time in the industry, what are the five common investment mistakes that you have observed?

We have completed a decade last year and we are optimistically looking to spread our wings in the near future. Common mistakes that I have observed:

In India, people own more large cap equity , even after knowing that there is better alpha in ‘evolved midcaps’. It would be interesting to note that out of the 8 lac crore industry AUM, 1.5 lac crore is in equity, out of which 1.2 lac crore is in large caps and the balance is in the mid cap space and other themes.(approximate figures).

Secondly, they invest in the mid caps of debt. By which I mean, that they take a credit risk or invest in schemes with lesser credit quality papers - eg: AA rated papers or lower.We need to reverse this by skewing our asset mix towards more evolved and promising midcaps in equity and buying into schemes with high credit quality papers in debt, of course after considering the risk profile of the investors.

Investors, think long term in debt and short term in equities, which needs a role reversal too.

We also witness miscalculated behavioral issues (the omnipresent fear and greed factor) like investing at high P/E and market levels and exiting at low.

Improper asset allocation or products mixwhich does not match their goals.

What basic investments that a client should do during his first fours years of employment?

Online term policies, health insurance, ultra short term funds, long term STPs in whatever affordable amounts into equity for disciplined and regular investment, depending on liabilities and circumstances, across different asset classes.

What is the procedure you follow when you meet a new client?

There is a certain set of procedure that we follow when we meet a new client:

We try to find his ‘Goal’ and then do the need assessment.

Risk Profiling (via filling in Risk Profile Questionnaire to understand his unique financial personality)Documentation of investment policy statement (An IPS is a short document like a client engagement contract which encompasses the investment goals, investment philosophy, asset mix allocation, agreement on terms and conditions on certain aspects wherein the scope of our services is defined, limitations of the firm is clearly spelt out etc.)

We take a step by step approach to investing.

What services do you/your firm provides? How do you charge for your services, and how much?

Our Core services are mutual funds advisory, mutual fund portfolio management services. Apart from these, we also provide, parallel services like, accounting and taxation. Our charges depends on the scope of work. We prefer low cost, low expense and high trail products.

What value addition does the client gets after paying a fee?

The client gets neutral and unbiased advisory. Regular portfolio reviews and rebalancing if required. Regular updates and interaction. Therefore, high probability of a happy investing experience.

How would you differentiate your service from the other advisors?

In some cases, we do notgo by client’s decision regarding investment.For instance, if the client isn’t matured enough to handle a particular product category and insists on investing in it we do not encourage him and advice him against his investment decision.

What are the few golden rules of investment that you would like to share with our investors?

Chase goals and not returns. Get your asset allocation right. Invest in equity through SIP/ STP mode, for lumpsum investments prefer low P/E levels.

New investors should first dip their toes in ultra short terms schemes initially, then slowly graduate to higher risk categories. Always think long term in equities and never compromise on the credit quality of papers in debt.