Mr. Dependable : Advisor Insights 18th Sep 2014
What makes Arun Kumar "Mr.Dependable"?
Arun Kumar, A.K. Associates, Bangalore

imgbd What makes an investor choose an advisor or a money manager and stick with him through the rollercoaster ride that markets take him on? What begets trust in the eyes of an investor? A simple one word answer : dependability. Mr.Dependable - a joint initiative between Religare Invesco and Wealth Forum - aims to help you explore all the dimensions of what it takes to be seen by investors as Mr.Dependable, and thus build your financial advisory practice on a robust foundation of trust. After all, dependability is finally what money management is all about.

In the Advisor Insights series of Mr.Dependable, we profile advisors who embody the spirit of Mr.Dependable. Advisors who are sharply focused on the 4 pillars of dependability - consistency, integrity, responsiveness and diligence - and who have built their practices based on trust earned through being dependable. Arun Kumar - one of Bangalore's most popular and successful IFAs, is Mr. Dependable to 50 families who have entrusted cumulative savings of over Rs. 175 crores under his advice. He is not just an advisor to them, but for most, is a trusted family friend, who is part of all family functions. These are HNIs who have access to many wealth managers - yet choose Arun Kumar as their "Mr. Dependable". What sets Arun Kumar apart from others? Why do his clients choose him? Arun Kumar talks to us about what the four pillars of dependability mean to him and how he has actually put these into practice, to earn the position he now enjoys with his clients.

To know more about the 4 pillars of dependability, Click Here

Consistency : Consistency is critical to build client confidence, but it also calls for unwavering focus on your key principles. In our firm, we have stuck to a consistent investment philosophy, through market cycles. We only go for simple products that we and our clients can understand. We only recommend funds with good track records. We stick to asset allocation and periodic rebalancing at all times. We do not recommend structured products, we do not recommend capital protection funds, we stay away from closed ended equity funds. We consciously stay away from market fancies. There is no change in our communication to our clients. We don't go to them and say, now get into midcaps and then go back after 6 months and say now get into large caps. Most importantly, we as a principle, never call our clients about any new product and solicit money in these funds. Clients call us when there are surpluses to invest and we suggest solutions based on the agreed asset allocation. We don't go for new ideas with back tested results - we prefer to see actual track records before considering products for our clients.

Maintaining this consistency in our investment philosophy has two clear benefits : (1) clients know that we will only do what is right for them as they can see that we stay away from anything even remotely toxic (2) when we look at the returns we have been able to deliver into client portfolios over the years, I can say that we have met their expectations, without taking undue risks. That's really what clients are looking for.

Integrity : There can be no denying the fact that a true advisor must always put his client's interests above everything else. We do that, all the time. But, its not as if we don't look at our interests. After all, we are running a business and need to make a reasonable profit. I suppose what has helped us stay away from temptation of high commission products is that we have very little cost pressures. My brother and I are the only two people who manage our firm. We don't have to worry about large salary bills to pay at the end of each month. Not having that pressure makes it a lot easier for us to always do the right thing.

Integrity builds trust - that's something we all know. But there's another angle : integrity keeps competition at bay. My clients are HNIs - they have various wealth managers always pitching some product or the other to them. Most of them trust us to an extent that they tell these wealth managers to contact me and run these products past me. They value my judgment on whether the product should or should not be in their portfolios.

Responsiveness : This has become a hygiene factor in our profession, but not being responsive can cause damage to our client relationships. Being responsive, being accessible creates comfort. Whenever I am travelling, my calls are diverted to my brother, to ensure that clients are always able to access us. Many times, just being responsive and accessible is what you need to do in times of market turbulence. When we had the recent tax changes in debt funds, there were many mails that my clients got from various sources, giving them inputs on what to do and products to focus on. All that we told our clients is to stay put until the dust settles and then take a rational call after due consideration. That was enough to soothe frayed nerves. Responsiveness in my view is not about taking a lot of action in client portfolios, it is about communicating quickly and effectively.

Diligence : For us, diligence is not about ensuring that every call of ours is right - its about ensuring that we do all the homework we need to do, before making a recommendation to a client. We have got some calls wrong - all of us do. When something goes wrong, we make it a point to quickly communicate this to our clients transparently and then tell them what we propose to do about it. I have seen that when we communicate bad news upfront and a plan on how to deal with the unexpected turn of events, clients are mostly ok with it and don't get nervous or jumpy.

One of the important aspects of doing our homework well before recommending products is our investment philosophy - where we cut out anything exotic and stick to simple products with established track records. The more complex you make a portfolio, the more homework you will need to do, the more are the chances of making errors and then explaining later what went wrong.

Diligence for us is also about maintaining timelines on our deliverables. A simple step - our clients know that they will get their portfolio statements on the 1st of every month - without fail. Our clients know that we will send a full dump of all computations to their CAs without any follow up from anybody, at the end of each financial year, to facilitate tax return filing. Diligence for us is about doing these small things right every time, so that clients know they can depend on us for all aspects of their portfolios.

All content in Mr.Dependable is created by Wealth Forum and should not be construed as views of Religare Invesco MF.

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