WF: How do you read this market correction and what are you advising your clients to do now?

Vithoba: We have been telling our large HNI clients to stay in cash and invest at or below 4600 levels on Nifty - that is roughly 15200-15500 on the Sensex. We are likely to see more volatility around the Budget - and should get our entry at these levels. For clients who genuinely have a longer term horizon, we are asking them to invest using STPs.

On the debt side, we had advised our clients to exit duration funds at 6% levels. Now that the 10 year has gone close to 8% levels, we are asking them to reinvest into duration funds. Nowadays, fund managers have become very active with duration funds - they are themselves churning their portfolios in line with market conditions - nobody is passively managing a duration fund today. With bond funds being actively managed now, we have confidence in recommending them to our clients.

Regarding gold, we asked our clients to invest at US$ 802 levels and have recently booked profits at US$ 1080 levels. We will now wait and watch - I will be inclined to recommend a buy only when gold goes back to the US$ 800 levels otherwise, we will skip this asset class for the moment.

Today, the number of alternatives for HNIs is increasing by the day. We can now even buy the Hang Seng index for them in India!

We don't focus on structured products - most of them are high on expenses and low on returns - which is against our clients' best interest.

WF: How have you tweaked your business model since the Aug 09 entry load ban?

Vithoba: We have introduced a service called portfolio advisory services, wherein we are recommending clients to enter into stocks. We have taken a terminal and wil be tying up 2-3 more brokers. We have three models - gold, platinum and platinum plus. This is not a trading oriented service - but recommending stocks from an investment perspective. Some of our platinum plus clients - who have more than 5 crs portfolio do however have a part of their portfolio earmarked for short term trades. We have a small team of dealers now in place for this service.

We charge 0.5% on direct equity AuM for platinum plus clients, 1% for platinum clients and 1.5% for gold clients. This is in addition to the normal brokerage on transactions. I must say that its still early days in terms of recovery of fees - how much of a challenge this will pose in the long run is what I will have to see.

Direct equity is a relevant part of HNIs portfolios and we have now started focusing on this piece in addition to MFs. My biggest client for example has 180 crs in direct equity - but does not invest in equity funds. If I have to be his true advisor, I must offer him services that he needs - which is equity advice. I am getting very positive feedback from my clients on the equity advisory service that we have launched.

On the mutual funds side, we are not charging any entry loads or fees. My clients are typically SME promoters - and not the white collar service sector senior executives. Promoters who have worked their way up the hard way value their money a lot more and are also less willing to pay fees. We therefore earn only as much as the AMCs pay us.

There is a clear income drop - no doubt about it. So, what we did is to broadbase our client segment. We are now tapping the smaller institutions - co-operative banks, trusts, societies, clubs etc for their investment requirements. Anyway, now there is no difference in pricing for HNIs and institutions - all have no loads - and our income is the same.

WF : Do you find the new environment too challenging?

Vithoba: The clients I serve are the ones who are served by private bankers and big banks. I tell my clients and my prospective clients only one thing - at any given point of time, if you need the right advise, please come to me. I have not told anybody that you have to invest here or there. There are so many occasions we said don't invest. Very few bankers will tell their clients that. We have never focused on insurance products, we have not given insurance products just because we want to make money.

So, we are truly part of the breed of low money making advisors actually! Because of which I am facing problems also. I want to be very candid about it - I am making less money than I could have, I have gone through a difficult phase now that MF income levels have also dropped. It is an uphill struggle. No doubt about this.

But, I also know this is a period of struggle - which will pay off in the long run. Clients who are holding large portfolios will somewhere down the line choose advisors like us over transaction focused bankers.

We send out daily sms updates to our clients on domestic and international markets and we post regular updates on our website www.indiaswealthmart.com.

Today, I have a situation where people I was chasing for months are now actually calling me up on their own and asking me to look after their portfolios. Today, I know how important I am in my client's life - because he calls me rather than I having to chase him.

I believe more and more HNI clients will value true advice over a big brand. I am therefore ok to continue with this short term pain - because I am confident I am on the right path.

WF: Any other product lines in the pipeline - any rethink on insurance for example?

Vithoba: Insurance - anyway I am seeing on your website what's happening there! We are always open to newer products - provided they are good for our clients. Websites like yours gives us good information on what's happening in the market and what new ideas are being worked on.

I think more than just products, we need to focus on the advisory part. Today, I tell my clients to invest in gold at US$ 802 levels, exit at US$ 1080 levels etc - based on my own homework. Tomorrow, I can advice a client to buy into a Hong Kong or China fund. The education part is the biggest challenge. Today, I may do some homework on specific ideas - tomorrow, I may not have information so readily available when AMCs are not pushing some of these products. Ensuring that advisors have the right resources to educate themselves on a going basis on all these new ideas - is the big challenge.