Amit Kukreja quit his job to don the hat of adviser in 2012. Today, he manages 65 clients. He chats with Morningstar about his journey in advisory and shares tips for budding advisers.
You were working in the Information Technology sector for 14 years. What inspired you to get into financial advisory?
My triggers to switch to financial advisory space were dual in nature. 1) Internal: I felt a deep desire to be on my own, work in an autonomous environment and create a deeper impact in people’s lives by improving their lives 2) External: I felt I was bored to death in what I was doing for living. I was yearning for a change in my career. I also realized that financial advisory was the need of the hour in our country. There were product sellers masking themselves as advisers and after I fell victim to bankers’ product sale targets, I realized the country needs authentic advisers and a paradigm shift in the practice model. Having realized that, I embarked on the journey of pioneering fee-only advisory model for the country.
Were you practicing fee-only even before SEBI came out with SEBI RIA regulations? What made you become a Registered Investment Adviser?
You may call it “serendipity” but when I started practicing in 2012 I was not sure about how to support clients beyond the planning process. Securities and Exchange Board of India (SEBI) draft paper on Registered Investment Adviser (RIA) was out already. And when it became formalized in 2012, I decided that with no baggage of commission-earning model, I should be able to do fee-only model easily in comparison to others. And I applied for RIA, consequently to become India’s second RIA as an individual.
How has been your experience in charging fee to clients? What type of fee do you charge?
My experience has been pleasant. It took longer than what I anticipated to create a full-fledged profitable practice model. I would not shy away from calling this journey a test of patience and perseverance. One succeeds only if he/she is committed to doing this journey utmost conviction. Luckily, the city that I work in, is full of working couples and they are my niche. In terms of fee-model, I charge flat consulting/process fee as well as assets under advice (AUA) fee. I manage clients’ portfolios of zero-commission products. And pleasantly that has earned me a title of “No-Commission” Financial Adviser.
What would be your advice to someone who aims to pursue fee-only advisory?
I have been sharing my experience in lot of seminars and speaking engagements. The points that I have been reiterating are:
- Have a back-up income for first five years of setting up your practice. This could be an earning spouse in your family or portfolio income or some other sources of income.
- Have a clear vision about what you would like to do and how would you like to grow your practice model, primarily based on what your personality strengths are. This profession requires strong skills of not just numbers and planning but also listening, communication and empathy. Any one who has deeper understanding of psychology can do well because it requires you to assess your clients’ inherent needs.
- One must know that this practice brings revenue and profitability much later in the cycle, but when the point of inflexion happens, the growth pattern is a sharp upward curve! However, until the point of inflexion, one’s ability to deal with uncertainty in revenue, and patience to make it a sustainable model will be put to test very frequently. And only one’s focus and relentless drive to move on will help him/her prevail.
- One must also realize that one’s visibility as an expert plays an important role in growing the practice, like any other business.
- Lastly, I would say technology adoption is key! It helps reduce cost, staffing over-heads, improve productivity, compliance, branding & communication.
What kind of services do you provide? How big is your team?
I provide fee-only financial advisory and investment management service. I also do lot for financial wellness workshops. I have a team of four individuals who help in accounting, para-planning, technology, & digital marketing streams.
How many clients do you have currently? Are you planning to expand your business?
I am serving about 65 client families, managing over 100 investment accounts and doing about 2/3 financial wellness sessions for the corporates a month. And yes, I am hungry for growth. So, growing the practice is always on my mind but only organically!
What major trends do you see in the wealth management space in future?
I believe there will a huge shift to no-commission advisory model. Clients are now becoming very educated to understand the benefits of this model. I am anticipating massive technology adoption by advisers, and clients to reduce their portfolio management cost and maximizing value addition. I also believe that application of psychology by advisers will create tremendous impact in their practice model. So any model poised to adopt a framework of technology, behavioral finance, and psychology integrated with like-minded individuals with shared values will do exceptionally well in this space.
Where do you see your firm three years down the line?
I don’t measure myself with numbers. The only thing I can say about myself is that I will be a happier person after having made lot of individuals and families happier than what they are today, by helping them manage the most important resource on earth called ‘money’!
