‘I want to be an investment advisor to the middle class’

When Joseph started, commission-free direct plans of mutual fund schemes did not exist. He still avoided distribution tie-ups. He used to advise customers on how to manage their investments and they themselves bought products on his recommendations. Direct plans were introduced in 2013. “After that, all my clients went straight into investing. They will buy insurance online on my advice.

Edited excerpts from the interview:

What was your career like before becoming an RIA?

I was an employee in life insurance sector since 1989. I worked with LIC of India for 11 years. Then I worked for three life insurance companies in the private sector for the next 10 years. I started my career with LIC in clerical cadre and gradually moved to higher cadre. At the time of leaving the corporate sector in 2010, I was heading the Institutional Alliance Channel at the Head Office of SBI Life Insurance Company in Mumbai.

How was the financial advisory landscape before SEBI introduced the RIA regulations in January 2013?

When I started my practice in 2010, there were no regulations in this area. Anyone can call themselves a consultant. I was not very comfortable with the way the industry worked. It was full of miss-selling. Companies and employees were making good money while customers were being taken for a ride. That’s when I decided to start something of my own.

Who was your first client and how did they come on board?

Most of the public was unaware of the concept of financial planning in 2010. Getting clients to pay a fee for advice was difficult when free advice was available from agents. I started writing articles on personal finance and posting them on my website. Slowly I started getting clients. But it was very difficult in the initial 3-4 years.

Can you walk us through the enhancements to your practice?

In the first four years of my practice, my fee collection was less than my expenses. I was living on my last savings. I became revenue positive only in the fifth year. Then, the business grew steadily year after year. Now, I’m getting more customers than I can manage. From April onwards, I will reduce my subscriber count. I will serve only middle class who really need this service.

Do you follow your own advice?

Yes. I recommend simple financial products to my clients. I also have similar simple products in my portfolio.

What has been the most challenging part about being a consultant?

After quitting a high-paying job in 2010, waiting for customers for the first four years was a challenge. Fee-only financial planning was a new concept in India. I didn’t know of anyone at the time who would charge a flat fee. Taking the road less traveled has its challenges but it is thrilling. I enjoyed this journey which helped me to establish myself.

What is your proudest memory being a mentor?

I have a client who is a retired Colonel of Indian Army and has been my client for the last 12 years. Five years ago, he persuaded his son to become my client. Now, his granddaughter is also a client of mine on her first job. He was very special that his granddaughter

They should learn the basics of personal finance right from the start of their career. The faith of such people makes me proud and humbled.

Have there been any tough times with clients?

I had a very senior Indian Navy man as my client. He was an aggressive investor. Still, I didn’t allow him to keep more than 30% of his portfolio in equities after retirement. Right after the market correction in 2020, he called me and complained that I didn’t inform him about the possible correction due to Covid so that he could transfer this 30% also to the loan. He always pretends to be an aggressive investor, but a small correction reveals his true risk taking abilities.

What do you think is holding back the growth of the advisory business in India?

If you want to become an RIA, you must have a postgraduate qualification in finance and five years of relevant work experience and must clear two levels of the NISM exam. As per SEBI norms, an individual advisor can handle only 150 clients. A flat fee advisor cannot survive with 150 clients. If he wants to serve more customers, he should get a non-individual license. he should invest 50 lakhs for obtaining a non-individual license. The compliance cost is also very high. So new advisors are not coming in the flat-fee advisory model. There are many consultants who are canceling their license or planning to charge a percentage of the assets. This is not good for the customers. They do not have much option to choose a good flat-fee financial planner in India.

Is there anything in SEBI regulations that you would like to change?

I think any graduate with three years of relevant experience can be considered for RIA licensure. If he is in flat fee model then he should be allowed to handle at least 500 customers. Furthermore, there are different types of RIAs that require separate classifications. RIA is now almost a common name. Robo-advisory mutual fund platforms like Kuvera are also getting RIA licenses. Advisors have different models – some are charging a flat fee and asking clients to execute financial planning, while others are charging a fixed percentage of assets every year. I think SEBI should classify each category separately and give different names so that investor can choose advisor as per his requirement.