How I transitioned from MFD to RIA

By Ravi Samalad |  18-07-20 | 
 
No Image
About the Author
Ravi Samalad is Assistant Manager - Editoral for Morningstar.in.

Rajesh Chheda grew up in Panjim, Goa. His love for numbers inspired him to pursue chartered accountancy. From a young age, Rajesh was enamored with stocks. He used to study company fundamentals and buy stocks in his college days. He earned his Chartered Accountancy degree in 1990 and took up an opportunity to work for a multinational bank in its share department.

Entrepreneurial plunge

Barely after a month into his job, Rajesh made up his mind to pursue his passion for stocks. He surrendered his CA license and took up a sub-broking agency in 1990. Rajesh vividly remembers the days when executing and settling trades was a long-drawn process. “The share prices of Monday were published in Economic Times newspaper on Tuesday. The paper was delivered on Wednesday by bus to Goa. The clients would call up on Wednesday. The orders would get executed on Thursday. The settlement would take a month. Today, settlement is done in a day or two. The brokerage transaction that would cost around 3-4% three decades back has come down to 0.25% or even lesser now,” recalls Rajesh.

Rajesh started his broking career when the Sensex had not even touched 1,000 mark. In the initial years, Rajesh used to write columns in newspapers sharing his perspective on stocks, forthcoming IPOs, etc.  His knowledge earned him visibility and credibility among clients.

He has closely witnessed many market cycles and the scams that left a scar on markets. Harshad Mehta scandal came as a bolt from the blue. However, Rajesh kept his cool and took things in his stride. Rajesh knew that the markets would track the trajectory of the economy and continued his journey in broking. Cut to today, he is fortunate that his conviction has paid off.

Foray in insurance

Over the years, Rajesh expanded his product bouquet to offer all services under one roof. Rajesh took up insurance advisory in 2001-02 and tasted success by qualifying for The Million Dollar Round Table  (MDRT) in just two years. He rose to the rank of number one adviser for Life Insurance Corporation (LIC) in Goa. This helped him enter the coveted MDRT league of advisers since 2004 and attending MDRT conferences in USA/Canada helped him connect and learn about advisory practices from other MDRT advisers. Rajesh has also attended the Financial Planning Association conference in the USA and other similar ones, where thousands of advisers from across the world converge under one roof to learn and get inspired by each other. From his interactions with overseas advisers, Rajesh could sense that the Indian financial advisory would follow the path of developed markets where investment advisers are held of the fiduciary standard and this was a road to the adaptation of compliance standards and advisory.

Shift to fee-only advisory

When Securities and Exchange Board of India (SEBI) came out with Registered Investment Adviser norms in 2013, Rajesh was among the first batch of IFAs to get an RIA license. Today, Rajesh has made a successful transition from a distribution model to a fee-only advisory.

Rajesh realised that IFAs were behind the curve when it comes to adopting technology. This nudged him to sign up with iFAST platform from where he executes client transactions. The platform helps with RIA compliance, back-office tasks as well as help with the compliance statutory audit from Mumbai.

From stock advisory, insurance advisory focussed on annuities and health to becoming RIA, Rajesh has constantly adapted his practice to give what is best for his clients. Today, he operates a niche practice focused on advising a limited set of families for whom he provides holistic financial planning. His firm Finance Factory specialises in cross border planning, retirement advisory and providing employee benefit programmes for corporates, which help them save time, taxes and employee retention.

Testing times

The COVID-19 pandemic has adversely impacted the hospitality sector in Goa, which is a tourist hub and relies on footfalls from tourists across the globe. Rajesh is actively advising such clients on how they can overcome this unprecedented challenge. In fact, he had been cautioning his clients to diversify away from their source of income from one business. He has been vocal to advise clients not to leverage too much to buy real estate or one particular asset class nor take excessive leverages by availing credit. His advice is now been vindicated. “The biggest fear among clients is not having the clarity on how this pandemic will evolve. We have to live with the virus and adapt ourselves,” observes Rajesh.

The lockdown has helped Finance Factory, to adapt to these changed circumstances. The team of seven is equipped to work remotely. He is operating with two members in his office while the remaining staff continue to work from home, like the hub and spoke way. While many of his clients are comfortable catching up over zoom and executing transactions online, he says that senior citizens and some high net worth individuals (HNIs) want face-to-face interactions. He tries to meet them over a cup of coffee by following the social distancing norms.

Learning never stops

“Never compromise on education. I spend a good amount of time and energy on upgrading my skills, whether it is through education and attending trainings. I went to the Indian Institute of Management (IIM) Ahmedabad course over 20 years back. The fee was a princely sum back then. I have regularly attended short term courses at IIM,” says Rajesh. He earned CFP certification in 2009 attended the CFA course to hone up technical know-how.

Rajesh likes to share his wisdom with the younger generation. He used to be a visiting faculty at Goa University and at the Goa Institute of Management as visiting faculty for nearly 25 years or so in the initial years of his career, teaching subjects of security analysis and insurance and financial planning.

Research

Rajesh believes that advisers should focus on their core strengths which is building relationships with clients and collaborate with technology and research offerings from a third party. He has been using Morningstar Adviser Workstation to build portfolios, research on funds and share insightful reports with clients. “You have to spend time on Morningstar Adviser Workstation and keep using it to realise its full potential,” says Rajesh. Besides, Rajesh also uses Syntoniq tool which helps him understand the behavioural biases of clients before he onboards them.

Untapped potential

Rajesh observes that technology is redefining the customer experience and the entry of new-age players has raised the bar for all players.

Nevertheless, Rajesh sees huge untapped potential for all kinds of intermediaries – whether MFD, individual RIA, robo advisers, or wealth outfits. His advice to budding advisers is to constantly adapt and reskill. 

Secret sauce  

Rajesh says four mantras has held him in good stead – ethics, good listening skills, sticking to processes, and upgrading knowledge. "And of course, it’s your team that matters, how you mould them, walk your talk and an adage that goes by: Team mates first, clients will then automatically be served better."

Add a Comment
Please login or register to post a comment.
<>
Top
Mutual Fund Tools
Feedback