What Renu Maheshwari learned from managing other people’s money

Meet Renu Maheshwari, who started off as a financial coach and corporate advisor and then co-founded Finscholarz Wealth Managers with her husband in 2012 to provide fee-only financial planning and investment management services.

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Maheshwari says money means different things to different people. “Financial planning is not just about recommending what products a customer should buy. It is about understanding various aspects of a person’s life, advising them about the ups and downs of the stock market and guiding them on the right path.” It’s about being able to. It’s a complicated job—it gets tougher when clients act under the influence of greed and fear,” she says.

Maheshwari, who manages the finances of around 120 families with assets above that of an advisor (AUA) 130 crore, shares her own journey as an RIA for over a decade, in this special series celebrating a decade of SEBI regulations for RIAs (Peppermint talking to consultants who have completed or are nearing a decade in the profession).

Edited excerpts from the interview.

Describe your career before becoming an RIA?

I’ve always worked in finance after completing my MBA in 1988, and after a few years in corporate finance, I took a break to raise my son. I returned to the workforce with more certifications and practical experience as a coach, trainer, and consultant. After doing CFP, I moved towards personal finance and started financial planning.

Around 2012, there was talk that SEBI was providing space for fiduciary advisors with new regulations. With RIA regulations in place, I co-founded Finscholarz with my husband, Jagdish Maheshwari (an IITian, ​​who built IT infrastructure for the firm), to promote fee-only financial planning services and investment management services and Also became the first individual RIA in Tamil Nadu.

How has the financial advisor landscape changed in the last decade?

Prior to the RIA regulations of 2013, there was no distinction between an advisor and a distributor.

Earlier, when people used to walk in, we had to explain to them what we do and why we are charging them. Now they come with that information, which is a big difference. I remember earlier people used to tell me that no one in India would pay for financial advice. They have been proved wrong.

Another big difference – for which I would give credit to the regulator – is that the markets are now safer. Investors now know that market-based investing is one way to create wealth for themselves and for the next generation. This is a remarkable change that has happened in the last decade. Also, more women are aware of the need to invest and take control of their finances and hence do not hesitate to seek professional help for the same.

What have you learned from managing someone else’s money?

Money means different things to different people. In personal finance, emotions are involved in everything we do. For example, people say, “I am not ready to sell this jewelery as it was bequeathed by my grandfather; This house is not because my grandmother gave it to my father and he never wanted to sell it; This was my first investment; Or this LIC policy was gifted by my father.” This makes financial planning more complicated as finance works on numbers, but a person’s behavior is subjective and will never be numerically driven.

Customers can’t tell us what they really want. But, as a consultant, we need to understand their needs and then work around that.

Who was your first customer?

One of our first customers was a young couple. The wife was considering taking a second break in her career and needed expert advice. We also analyzed their behavior by knowing their current and future earnings and expenses, assets and liabilities, family background and future aspirations.

The exercise showed she could afford a second break, but the couple would have to cut back on their expenses. However, they were not ready to bring down their standard of living and hence decided to go for another child. They are now leading a secure financial life and are on their way to becoming financially independent.

Can you tell us about the first year of your practice?

The first year of our practice was all about innovation, ideas, struggle and hard work. Industry opinion around a trusted practice was full of mistrust and hesitation. We talked to clients about investing directly and the experts they need to work on their behalf. We were fortunate that we had some amazing clients in the beginning. They talked about us to their friends and brought more customers to us. All of our clients have come through referrals only. Since then, our clients have grown at a minimum CAGR of 33%. I am sure this will be the case with most advisors in India because people need advisors.

What is it like to be a female financial advisor?

You are from a different generation than me. So obviously, your experience of gender bias will be very different from my generation’s. And did I find it difficult? sometimes yes There were a lot of potential customers who walked into the office and thought Jagdish (my partner and software engineer) would talk to them. My husband and I would sit next to each other and some of the industry representatives would direct the conversation to him.

Such were the biases. But it has changed a lot over the years. I feel my life is very different than it was 10-15 years ago. However, on a lighter note, my gray hair helps me transcend these prejudices.

What is the hardest part of being an RIA?

Too many investors take us to the top of the market. They see everyone making lots of money from the markets. They come with the expectation of making a lot of money in a short period of time. They think that a consultant is going to pull a magical rabbit out of the hat and out of nowhere will suddenly make a lot of money for them. They are the most difficult customers to deal with and we turn some of them down.

Are There Any Limits on the Number of Clients an RIA Can Accommodate You Apply for a Corporate License?

The fact that everyone thinks we can’t scale the Personal RIA model because of the limit on the number of clients is not entirely true.

You can only serve a limited number of customers. It is not just about the rules but also about the number of customers you can spend time with. I have about 120 families now. Even if I do two meetings with each family in a year, that would be 240 meetings per year. This is different from the back-office work that we need to do as a consultant. SEBI’s cap of 150 clients per advisor is reasonable.

When we have multiple consultants we will go for corporate license. The process is ongoing, and we hope to have qualified consultants on our team soon.

What is the single most important reform needed for RIA regulations?

We believe that the RIA Regulation is the biggest reform in itself for investors in India.

The higher standards of qualification for applying for an RIA license will ensure that the quality of consultancy in the country continues to improve. Currently, an RIA must have a post graduate in finance with five years of experience in the advisory field to apply for a license. There are two exams- NISM XA and NISM XB- that a candidate must clear in order to get a consultant license. NISM exam is of a good standard and ensures a good level of qualification. The RIA has to take both these exams every three years to renew the license. But doing so is a matter of tension, especially for senior advisors. This puts business continuity at risk for individual license holders. (If they don’t pass the exam, they can’t do any business until they pass it again).

Also, different consultants may focus on different areas of practice and may want to spend their energy specializing in other courses and not write the same exam over and over again.

It is internationally accepted practice to allow CPD (Continuing Professional Development) points for relevant courses, professional work and conferences to renew the licence. If SEBI allows this for RIAs, it could be the single most important reform to ensure ‘ease of doing business’.

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