Advisor Speak, Vivek Rege, Mumbai,

WF: Can you give us little bit of a background about VR Wealth Advisors and your journey as a financial planner over the last seven years?

Vivek: After I did my CA inter in 2000, I was with the family business for some time. Coming from a finance background, I wanted to start something that would excite me and give me job satisfaction. That's how VR Wealth Advisors was started in 2003 mainly from home, without any capital to begin with - this was around the time when AMFI was set up and the ARN numbers started.

I did not have any legacy of clients or family businesses. It all started with cold calls from a list that an insurance company gave me when I became their agent. This was a list of HNIs and affluent people who needed to be contacted. Just following up that list over a period of time converted a lot of clients who are still with me.

Over a period of time the advisory model did work and lot of references started flowing in and now the complete business model is on 100% reference. Post the initial cold calling there was no time to give a cold call to anybody! I don't accept any walk-in clients now, only through references.

WF: Did you start off with financial planning orientation or did that develop over a period of time?

Vivek: With my CA background I felt that advisory services should be in a structured format and so I started with a financial planning orientation.

WF: What is your business model today and its size?

Vivek: We follow a mix of fee and commission based model where we earn revenue through commission as well as charge client fees. I advice around 175 families - most of whom are affluent and some of whom are HNIs. The overall AuM would be around 250 crores, of which mutual funds are 70 crores. Besides mutual funds, we are also active in PMS and stocks. Insurance is now a lower focus - mainly term plans - which anyway don't count in AuM.

WF: You mentioned that you are actively involved in PMS and equities. Given that advisors are slightly disillusioned of late with PMS schemes, what has your experience been?

Vivek: I work with only one PMS provider, someone who understands this business and has a fabulous record. Again I introduce only those clients who would like to get that extra edge over and above the mutual funds, very well conveying to them that this is riskier territory with higher reward.

WF: What percentage of your clients have got financial plans written by you for a fee?

Vivek: Up to now I have converted 50% of them. The average age of my clientele is 35 years. This is a young group who are in the middle and top corporate management levels, want a structured approach and are more than willing to sign up for writing a plan.

WF: What is the kind of fee model that you operate on? Is it AUM based or is it a one time fee for writing a plan?

Vivek: We charge a fixed fee for writing a plan varying from Rs. 12,000 to 25,000 depending on the complexity of the plan. If a client agrees to manage his assets through me, then there is an asset management fees which will be 0.5% and 1% depending on the size of his total assets. There are certain products which help us earn also. So to that extent we do not double charge. Our total earnings from a client would therefore be in the region of 1% to 1.5% of assets managed.

WF: That is a very profitable business, in today's circumstances! How many client-facing people do you have now?

Vivek: We don't have any advisors really. I am the only client-facing person in the company. So far we have only developed people on the operational side and not on the sales side because right from the beginning I have been more sensitive to the clients whom I am handling. Right now I favour a personalized approach.

WF: Can you take us through the story of how you won your biggest client (no names need be discussed)?

Vivek: Back in 2003-2004, when that cold call list was given, this was of people who were on the very high management levels of companies. People did not like or want to call them. One of them was a person who currently heads an organization and was very meticulous about whom he wanted as an advisor. Because of my soft approach, it took me almost two years to get through to him! He is still one of my biggest clients and has introduced another 30 to 40 people.

WF: And why do you think he chose you?

Vivek: I have always believed in a soft approach and that it is somebody else's money that I am managing. In a market of aggressive salesmanship, this approach itself might have given him the confidence that I am not here to make a quick buck at his expense and that I genuinely believe in creating a long term relationship. Probably, that's what was different in my approach and that may have worked for me.

WF: Can you also share an experience of some client who was exceedingly tough to crack?

Vivek: In 2004 rebating used to be a very sought-after thing. I never practised rebating, even in those days. There was an HNI client who had come through a reference and talked business of more than a crore of rupees in 2004, saying that he expected rebating from me. I told him that this was not what I looked for in a client relationship. He was used to getting something back but I was very adamant that this was not how I worked and that I believed I coud add value as an advisor rather than a rebater. It took me three or four meetings over a month to convert him and make him see that the value of advice is better than the rebate offered. He is still my client, even today.

WF: A lot has been spoken and written about platforms. As an advisor do you see the need for a platform? And if so, what exactly are you looking for in a platform?

Vivek: I would certainly look at a platform basically from the point of economy of servicing a client and making transactions as paperless as possible. I would ideally look at a platform given by third parties approved by AMFI and not by AMFI itself.

WF: How do you think a platform will make life simpler for advisors?

Vivek: With more and more people getting used to paperless transactions now, if we have to stay in the market and give the same level of experience to the client as what probably ICICI Direct would give, with an advisory backing behind, it would help us immensely.

WF: The other key topic now back in discussion is the fee collection mechanism and the merits of variable entry load first mooted in April 2009 by AMFI. Do you see that as a solution for fee collecting mechanism?

Vivek: Personally, variable loads would not be useful for me because we are already collecting fees. If I look at pan India level, then I am sure that lot of people will not be able to collect fees because of mindset issues - in which case a variable load structure would certainly help the industry overall.

WF: What are you plans for VR Wealth Advisors? How do you see your business growing over the next three years?

Vivek: From a single financial planner working as support staff now, I would look at at least 20 planners working with me over the next three years where we have a very robust organization servicing on the financial planning side. And the percentage of revenue from the overall fee including financial plans and AUM fees has to move up from 10% to 50%, of which the financial planning component will have a higher share.

               

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