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My background
I belong to a village called Lengara, which is about 10 kms away from a town called Vita, which is one out of 9 taluka headquarters within Sangli district in Maharashtra. My father is a farmer, my mother is a housewife.
I was a good student - I completed my MBA-Finance from Vishwakarma Institute of Management in Pune, and was the best student of my batch. I soon landed a job with the international giant State Street, as an India based offshore assistant to wealth managers in US. I did that job for only 5 months. In those 5 months, I understood what wealth management is all about and the vast scope for this service in India, especially in smaller towns. I did not want to be constrained to work within set parameters which is what you need to do in large organizations, so I left State Street and came back home to Lengara, to set up my own financial advisory firm. I decided to set up my office in Vita in April 2008, our nearest taluka headquarters, though I continue even now, to live with my parents, wife and child in Lengara.
From stock broking to fee based financial planning
In April 2008, I started a stock broking firm. There were already 2 stock brokers in Vita. It's a small town, but I was confident that I will be able to generate business. I saw in State Street that wealth managers typically handle only 30-40 clients. I reasoned to myself that I should surely be able to get 30-40 clients in Vita, to sustain my business. I also started selling mutual funds in 2008.
In 2010, I ventured into fee based financial planning. In Vita, there is not much scope for learning, but I was determined not to allow that to come in the way of my professional growth. I travelled to Pune, met financial planners there, studied closely their practices. I travelled to Mumbai, Bangalore, Delhi, met several planners and imbibed practical experiences from them. I took a full 1 year of learning before I was able to freeze my approach to financial planning - which was a mix of my own beliefs, my understanding of my target clients and learnings from planners in many big cities. From the time I set up financial planning services, it took me a year to write my first plan - I wanted to be sure that I am 100% comfortable with my approach and my solutions.
Initially, I started charging Rs.5000 to write a plan. My target clients were doctors, lawyers, teachers, and even businessmen. Initially, out of every 10 prospects, I could convert only 1. My initial approach was SIP oriented, but I gradually realized that SIPs are only a component of the real solution that I wanted to offer to clients.
Have you set your life goals?
I understood that helping clients set their life goals is the most important job of a financial planner. All else - SIPs, term insurance etc - are secondary. I have made a series of presentations on the importance of setting life goals - so much so, that I am confident today that whether it is a rickshaw driver or a successful businessman, I have a presentation to make to each and every individual on setting and achieving life goals.
Most of us have a long list of unfulfilled desires. I tell my clients that the first step in achieving these desires is to convert them into goals - write them down, quantify them and commit to yourself that you will work towards achieving them. In business, at work, we have targets, goals. Either we set them or somebody sets them for us. They are specific, they are time bound. We get focused and work towards achieving these goals. But, when it comes to our personal lives, we don't set goals - we just have a list of desires - and we go about life hoping those desires will somehow get fulfilled. They don't get fulfilled, and then we have unhappiness. People have business goals - but they rarely set life goals. My job, I tell all my clients, is to simply work with you to set your life goals and then work with you to ensure that these personal goals are achieved. My job is not selling you mutual funds - I am your personal goal planner. You need to plan - nothing in life can be achieved without a plan : that's my simple message to all my clients and prospects.
The fact is nobody goes through a process of planning their personal goals, and when they see somebody who will work with them on this aspect, they are eager to begin. My conversions have moved up to 6 out of 10 prospects, from when I started adopting this approach.
Completing the offerings with loans
Today, I have 81 clients. I now charge Rs.21,000 to write a full financial plan and I charge Rs. 14,000 as annual renewal fee. I am happy to say that all my 81 clients are paying me my fees. No client has left me since the time I set up my service. I even have 2 chartered accountants as my clients - they understand the world of finance, but don't have the time to look into their own personal finances - which is where I come in. My AuM is Rs. 5 crores, of which mutual funds are Rs. 3 crores and direct equity is Rs. 2 crores.
I have now taken up a franchise with Bajaj Finance to offer loans to clients who need them. This helps me complete the product offerings on both sides of the client's balance sheet.
Will clients pay?
There is a strong perception that clients won't pay fees and especially small town and rural clients will never pay fees. My simple submission to all IFAs who believe this is that we must first develop self belief. I took a year to write my first financial plan because I needed to be first convinced that what I am offering is of value. Only when I became convinced that what I am doing is valuable, was I able to go and seek that value in the form of fees. If I am not convinced myself, I can never convince my client. We need to first work on what we are offering to a level where we ourselves develop conviction in the value of our service - then we will find it a lot easier to ask for fees and clients will see the value, because you are able to demonstrate with conviction, the value that you offer.
Partner with the best
I must thank two companies for helping me go out into the market with a proposition that I am fully confident about. I use NJ India's platform for all execution support. Without them, operating from a small town like Vita would have been very difficult, especially when it comes to mutual fund transactions. I also use Ffreedom Financial for my financial planning support. Mr. Sumeet Vaid is a visionary in the world of financial planning and there is a lot that we can all imbibe from Ffreedom Financial. Working with the best partners enables me to offer the best comprehensive solution to my clients.
I believe that the size of your own home market should not come in the way of your learning or in the way of offering the best to your clients. By partnering with the best, I am offering a solution to my clients that is no way inferior to what clients in large cities get. And, because I continue to travel very frequently and meet so many planners from so many cities, I don't allow my knowledge to be confined only to what is available in Vita.
Growing the financial planning movement in southern Maharashtra
Mr. Sumeet Vaid and I worked on a project to spread financial planning in southern Maharashtra. I identified 70 active and motivated IFAs and insurance agents. Sumeet and I conducted a workshop for them, to explain the benefits of adopting a financial planning approach in their businesses. I showcased my practical insights on delivering this service in small towns. 20 of these IFAs became convinced to convert their service to a fee based financial planning service, and have paid me Rs.30,000 each to guide them on this path and help them set up their financial planning practices. All these IFAs are from B-15 cities and towns.
Financial OPD
My next project, which I intend starting in March 2014, is to set up a Financial OPD. The way I look at it, is that writing a comprehensive financial plan is akin to a doctor doing a surgery - it's a detailed exercise. Now, where does a doctor get his patients for surgery? By running an OPD practice. By treating patients who come to him for consultation and pay nominal amounts for consultation. Many of these patients pay a one time consultation fee, get the solution they are looking for, and move on. Some are diagnosed with more serious ailments, at which point a surgery is recommended.
In my financial OPD, I intend having a similar concept. Not every investor will sign up for a full financial plan straight away. But all of them do have some financial needs, queries, problems. I intend charging a one time fee - of maybe Rs. 300-500 for a single consultation session, where I can address the specific queries or problems that they are facing. Some may need only that, and may move on. Others may see, during this OPD session, the need for a deeper surgery into their personal finances, at which point, I can offer them a full financial planning service.
My message to rural IFAs
My message to small town and rural IFAs like myself is very simple : its time we change our outlook and our approach. We know that there is money in rural India. There is no need for us to offer anything but the best to our clients, just because we are operating in small towns and rural markets. Get your clients to embrace new concepts, get them to embrace technology. They will love it. My office is a full wi-fi office and I often communicate with my clients through Skype calls. Get clients comfortable with adopting technology - believe me, they will love it, and your day will become productive. We just have to change our attitude, our approach.
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