My journey to build a sustainable financial services solution
In 2012, a wave of digital advisory had just started to take over US financial markets. Market participants coined the term ‘Robo Advisory’. Betterment, wealth front, etc., were some of the initial Robo advisors in the US.
Inspired by this trend, I decided to quit as a management consultant and create something for the Indian financial markets. Insurance agents, mutual fund agents, and brokers occupied the wealth management industry—questions such as why to save, how much, where remained unanswered.
These agents or brokers were interested in just pushing the products. But on the other hand, the investors, too, were more comfortable buying products than reflecting on why they were doing what they were doing.
Initially, I identified mutual funds as the closest products that could have catered to investors’ asset allocation. However, the backend systems did not allow a smooth information flow. In addition, India lacked a tech framework to enable data sourcing, analysis, execution, and fee collection, unlike the US. We had our small success with Finqa (Financial Questions Answered), but I realised that scalability was an issue.
Unlike the western world, Indians prefer human interactions (touchpoints). As I pointed out in my 2016 article on financial services trends that online transaction platforms will take over investing space soon. Although we see a plethora of online transaction platforms, they lack advisory. So far, SEBI compliance for the advisory platforms is also biased towards human interactions. No wonder, in the last two years, a lot of these online transaction platforms have surrendered their advisory licenses.
When it comes to money, we have certain expectations and comfort with a particular person. Interestingly, the person could be associated with any institute/company, but in the end, the relationship is person-dependent (human interaction). In simple terms, Indian investors want a trust-based human relationship to meet their financial needs.
Over the last ten years, I have focused on building my financial advisory practice on high ethical standards and a human interactions-based approach. Instead of dealing with the masses, I dealt with selected few investors.
A few months back, I started evaluating how an existing demat account be used for advisory. For example, an investor has a demat account with Zerodha, ICICI direct, etc. Can this account be used to get started instead of opening a new account? The idea of a digital solution for Indian investors came alive.
In 2021, I started exploring tech platforms for advisors. I instantly connected with Wealthdesk team. As a result, I can now offer a tech solution.
Based on my last ten years of client interactions, I knew that building trust is gradual.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” – Warren Buffet
I wanted a solution in which investors do not become part-away from their money. They can only take advice with a click of a button and implement it. The advisor is paid only a fee, and the investor is free to stop the service at any time, without any lock-ins, etc.
Investor education and advisory rationale can be implemented through easy-to-understand videos and regular live sessions. I recently launched my Youtube channel. Please subscribe to get regular updates.
In my private advisory, financial solutions are individualistic. The challenge with an online solution continues with only a standardised offering. I plan to bridge this gap through online sessions so that investors know what they are doing.
I have created three solutions meeting the needs of three categories of investors:
For aggressive investor
Direct equity strategy in businesses that provide quality and are available at an attractive price. The investment objective is to meet or exceed annualised 15-20% (pa) return. The portfolio will include 12-15 stocks across publicly listed space. The research is common for my private advisory investors and IOS.
For moderate investor
AWS combines Direct equity, bonds, REITs, and Gold ETFs, whereas IOS is the only direct equity strategy. AWS is a tactical strategy to reduce volatility. Investment objective is to generate annualised 10-12% (pa) return.
For conservative investor
CS invests in PSU bonds, REITs, and high dividend yield stocks. The investment objective is to exceed a fixed deposit return to generate annualised 7-8% (pa) return.
It’s been almost ten years since I started my journey. Of course, all businesses see their lows; I had my share too. But Charlie Munger has always guided me; it is not about being smart; it is about not being stupid. Fortunately, I avoided stupidities and focused on a pull-based model than a push-based model. This, on its own, has led to tremendous growth in assets in my private advisory.
Howard Marks, Warren Buffett, Charlie Munger, Seth Klarman, and many others have guided me. Therefore, I am not influenced by market fads. Instead, I look at businesses and relationships that are long-lasting and durable. Cash flow makes a business durable, and integrity makes relationships durable.
I am excited to offer new tech-based solution and generate wealth for investors who can start with small sums and see it grow.
It is just the beginning.