Shift to direct
Mumbai based adviser Vivek Rege has changed his office thrice in the last 14 years to match up to his growing business.
His current office is tucked in a quiet lane opposite Mahim station. A section of his compact office space is dedicated to the firm’s advisory function in keeping with SEBI’s requirement for RIAs to maintain an arm’s length distance between the distribution and advisory services.
While all RIA firms have created separate divisions in their offices, for Vivek, it is not merely a physical segregation. He aspires to adhere to SEBI’s rule in letter and spirit and has already started moving his clients to direct plans. He has been planning to do this right from the day he received his RIA license in 2014 but unavailability of direct plan feeds kept him from doing so.
When SEBI allowed AMCs to share direct plan data feeds to RIAs in 2015, he started moving his clients to direct plans. While Vivek is providing execution services he has given up commissions for clients investing in direct plans. He prefers to operate on a purely fee model and is in the process of migrating his remaining clients to direct share class.
The entrepreneurial bug
Vivek had the option of continuing his family business after his inter CA. However, he wanted to establish his independent identity by pursuing a career in finance. He took up a job with an audit firm and after gaining some experience, he decided to strike out on his own.
While exploring business opportunities, Vivek realized there was a vacuum in financial advisory. “I found that the market was product-centric. There was a dearth of advisers who would sit down with clients and have a conversation about their goals and aspirations. I wanted to fill this vacuum,” recalls Vivek.
In 2003, he set off to open his own practice. Like most advisers, Vivek began his journey by tying up with an insurance firm trying to find clients through cold calls. However, what differentiated him from other agents was his professional approach. “I used to carry my laptop for prospect meetings. I showed prospects the right reason to adopt the solution. At times, I have been upfront in telling the client that there is no suitable product available. They were directed the right way and they were impressed with my professionalism at a time when most agents carried just application forms,” says Vivek.
The quest to hone his advisory skills sent him back to school. He acquired the CFP certification in 2007 and is currently pursuing CFA.
Expanding product bouquet
His foray in wealth management coincided with the entry of private sector mutual funds in India. To expand his offerings, Vivek started advising on mutual funds. As his clientele grew he felt the need to have a support team and an office. He leased out his first office in 2004 by hiring two support staff. His current office serves 85 clients on assets under advisory of Rs 140 crore with team size of ten.
The 2009 entry load ban forced him to rework his model. Vivek says that the ban turned out to be an opportunity to talk to clients about fee. Interestingly, some of his top clients were forthcoming in helping him work out a fee model. “Post the entry load ban, I reached out to a few of my top clients and apprised them about the change. Since they were happy with my services they helped me work on a fee model,” explains Vivek. Today, all his clients pay a fee for his services.
Vivek has set out on a bold mission – a pure advisory practice. He is ready to forego commissions as he is being already compensated through fees by his clients. When asked what encouraged him to take this path when a majority of RIAs continue to operate on dual model (fee plus commission), he says that his he will offer what is in the best interest of clients.
Though the fee he charges is not as high as then prevailing entry load it does compensate him for the advice dispensed by his firm. Clients pay an upfront fee for constructing the plan and a certain percentage on the AUA for execution, monitoring and review, depending on the level of engagement.
Amongst the first 30 batch of RIAs in India, a majority of his clients are upwardly mobile senior managers working in large companies. Money-rich, time-poor, his clients require deeper engagement and are willing to pay to get the best service. This keeps him from adding too many clients.
To cater to his evolved clients, Vivek relies on a number of tools to make his job easier and convey his message across in client meetings. An integral part of his prospecting is showing prospects reports generated through Morningstar Adviser Workstation (AWS). Vivek says that AWS has given him the confidence while talking to clients. “Morningstar Adviser Workstation gives a validation to what you wish to convey to clients. Today, prospects want validation of our claims which the tool provides us. If you have the best hospital with talented doctors but you don’t have an MRI machine to diagnose the disease you are incomplete. Similarly, Morningstar Advisor Workstation helps us diagnose and cure clients’ financial wounds,” says Vivek.
Besides, using AWS helps him save on time and cost.
Future plans
Going ahead, he plans to have more offices in different parts of the city so that it cuts down the travel time for his clients.
Vivek Rege, Founder of VR Wealth Advisors.
How he caught our eye: Has moved a majority of his clients to direct plans and is in the process of transitioning to pure fee based advisory.
Favorite book: Investing Against the Tide: Lessons From a Life Running Money by Anthony Bolton.