Management Consultancy for Reshaping Investment Advisory business

The caption might sound strange to some . What is the need to Management Consultancy Services for reshaping Investment Advisory / Financial Planning Services . One might feel I am already doing my business , have good nos of clients , able to generate good revenue so who can advise me or what new some one can advise me regarding my business .  This is similar to the client feeling or saying why i can not not manage my own investment ? Why I require an Investment Advisor . So when your client says this what is your response ? Now put all those in the above question – Do I require Management Consultancy for my Investment Advisory Business  ?

There are always two ways to evaluate any thing – one from heart and other from mind . Both evaluation will never give you the same inference. One is more logical, practical and the other is embedded with sentiment .  If we know how to pick the best of the two or fine balance between the two then fine but in reality its not . We are governed more by sentiment than logic .

We have seen the reaction of many distributors , Independent Financial Advisors after SEBI brought so many regulatory changes . Most became disheartened , many confused , many left the business but few looked it positively ,accepted and started working to change their business model. Theses nos is in fact fraction of the whole lot .

Lets look what will happen if I do not reshape my business model . Direct plan , online purchase , online advise all these will slowly make the advisor redundant if he continues his old way of managing business . Times flies fast and client of 25 years a decade back is 35 years now and now every year we will have more new age clients ( tech savvy ) will enter and oldies will grow more older .  Investor of yesteryears may be moving from equity or balanced to balanced and debt whereas new , young age investor should ideally go for equity as time is in his side . Again the risk profile of today new entrant in investment may be different from those who are much senior to his age .

For an advisor now apart from adjusting to new regulatory situation he also has to adjust to new mindset of new investors as well as the changed expectation of the existing ones .  In the same family a new age investor might have some influencing factor as far as decision making of his father or elders in family . Gone are the days when young were told and they followed , now we live in a family where views of all age is equally respected .

Advisors now need to understand the changing decision making process in family and in society . If consumption pattern changes , life style , living habits getting changes so one can expect change in attitude toward money management .

With newer and newer technology coming , social media marketing catching attention communication pattern is also changing . With time being a constraint now more interaction between friends , professional happening in informal atmosphere also be it gym, jogging park or in get together . People might be short of time of read and learn from distributors communication but quick, short and focussed pitch will also catch attention .

The clients today need Wealth Creation and preservation of growth of that wealth . There is no product loyalty so assuming some one will stay lifelong will only work when either the client sees value in terms of return or long term benefit is rightly communicated .

Further the investment world itself has become very dynamic now , new businesses are emerging , capitals finding their ways for more profitable opportunities , stock market becoming more vibrant and influenced by international factors , multiple source of information are available so very difficult to predict thought process of an investor will remain static as was earlier . Changes needs to be understood quickly , analysed and timely corrective actions if need felt .  

So if one looks there are so many drivers of investment advisory business which are changing and expected more to change e.g – technology , midset , economy , influencing medium and environment , life style , thinking pattern etc you can not have a static business model . Though the basic fabric may remain same, value driven , principle based but there has to be tactical moves , strategic shift in sales approach, marketing style, communication pattern so that one does not falter or remains behind in competition . All this is possible if either the Investment Advisor spends time and resources to stay in game or be dependent of a management consultants who not only foresee changes but interprets it correctly and advise the investment what strategic moves to make .

One reason an external consultant is better because as said in the beginning we are governed more by emotions in our decision making and in this dynamic industry , decisions can be taken or change is accepted more by logic and less by emotion and if thats the case better to take guidance and advise from some one who is not attached emotionally but professionally with your business. 

Nurture India Consultants : Learn to grow in career

Nurture India Consultants : Learn to grow in career: Most of the professionals want to grow themselves as CEO and Chairman of any company . Few succeed and many don’t. Is a chance or some mec...

Learn to grow in career

Most of the professionals want to grow themselves as CEO and Chairman of any company . Few succeed and many don’t. Is a chance or some mechanism to be followed? All of us have strengths and weaknesses. Weaknesses are meant to be reduced to the minimum and strengths need to be grown in proportion. Identifying one’s strengths and weaknesses is part of introspection and comes naturally.  Countering your weakness is relatively easier as once identified, a weakness can be consciously mitigated. What needs special attentions is your strength. Working on and nurturing your strength is a difficult task. Many can argue, well I am already good at this aspect what more I need to do ? Here lies the challenge of higher growth and those who learn this trick, move up the ladder quickly compared to those who don’t stop and learn. You never be complacent about your strengths as there is no end to perfection. Working consistently on your strengths and mastering it to your advantage is the key for success. There is always scope for growth or refinement in your existing strengths.

The best approach for growth could be combining strengths and creating a mega strength which could be better than the sum of the individual strengths. It also implies that you need to synergize strength for better results. Let’s take example of Rahul Dravid , a perfect batsman with sound playing techniques and with a very cool head and strong concentration . Result – Bowlers found hard to get through his gate for most part of his career. The three strength he had when combined together made him almost invincible.

 Each should be his/her own CEO.  You drive your inner passion for growth through a self check mirror in yourself. Two benefits of being a CEO of yourself:  One you observe , understand and learn what CEO is and does. So you slowly start not only imagining yourself as one but also instilling that in yourself. You start correcting yourself, disciplining yourself and that is where you start working on your strength effectively.

Coming back again on pairing and combining of strength for mega strength, it is also important to note which strengths are positively correlated and which are negatively correlated. Positively correlated ones are those whose effect may give result in same direction i.e. complementary ones whereas negative correlation ones are those whose effect might act against each other and in fact can nullify or reduce overall impact.

Now how to do that. List down competencies you have. Also what are the competencies one need to have in order to build effectiveness in organisation. See which ones are complementary and which are the ones we find in great leaders . For example , think of a combo of knowledge + assertiveness + communication . How effective an individual becomes as a leader.

Well certain competencies or strength needs to be build upon if missing. It requires some hard work, some discipline and some determination but definitely possible . Time is your side but the earliest you have that in your armoury the better positioned you are . Always build on that strength which is valued by all.

Please always remember positions in organisations are virtue due to experience , expertise , contribution , qualification , and sometimes luck but competencies is something which is your own and it does not need approval of any senior to have in your arsenal. The earliest you acquire, refine, strengthen and combine the better you become both on professional and even personal front.

Also who knows in years ahead most organisation may move on 360 degree performance evaluation where at every stage your growth path may be subject to good evaluation by many of peers , subordinate as well i.e. you evaluated on different perspective so the more competencies and strength you build and exercise it will appeal to most. Some of the qualities most will value is you seen as positive influence, you nurturing to individual growth and effectively resulting organisational growth, Your collaborative approach for a higher result adds more value for all.

So now don’t lose time start working toward your goal. 

Zee Business Money Guru 29.7.13 Prakash Ranjan Sinha, Director, Nurture India Consultants Pvt Ltd

What an Investor should be doing in Present Market Situation

What an Investor should be doing in Present Market Situation

We are seeing a situation where rupee just becoming weaker and weaker vis a vis dollar, stock market which was moving northward some day back now going south ward , GDP growth has been also showing downward trend last some quarters , interest rate movement depending on lots of economic factors dominant one being inflation etc . If anyone asks me what do I foresee from here in terms of investment and return I am at sea to reply to this . It is not because of real economic and financial factors but things that are influencing these factors are not clear and more of confusion . If some expert giving a sure shot reply it is either coming from his optimism or pessimism or but is it from fair analysis of facts ? .

Being an investment advisor I feel my responsibility is more toward guiding investors on investment front with sincere intent. Firstly I  believe before advising any client the advisor should ask or judge himself – does he know everything to guide his clients about investment properly . Do we know what will be next move of Govt or corporate decision makers ?  Do we know what will be the thinking of FIIs today in terms of their investment in India or else where ? Do we really know what policies of Govt will see its light or get implemented and by when ? . To most answer is not clear .

Well the realty is most of us just read or gather information from secondary sources i.e TV, Newspaper , websites , research report and form an opinion . Is the information moving in cyclical way amongst these sources and so one influencing the other or there is really primary sources of information. Very difficult to comment on this . My take on this is today most of these secondary information are short lived and following day to day news and views . The news and views to a large extent are not fundamental to the assets where investment goes but more with perception of different stakeholders in the financial world on various non economic , non financial factors more than  economic , financial factors and that is what leading to more confusion than clarity about road ahead .

Globally also when most economies are facing some or the other problems in their own backyard the various permutation and combination of decision making also is more non clear than clear . So that’s why my first query to any expert is how much they know or how much they are sure about how different financial and investment assets will perform so as to give correct investment advice to the clients .

I feel when so much of uncertainty , non clarity then the best thing is to play safe first . When I am saying safe I mean protect from downside return in short to mid time span  . Lets look all assets today . Gold seems riskiest in short term so should be avoided . The only way I feel Gold should be apart of someone portfolio is one from future family need aspect i.e for marriage in family . Else can be just 5% of overall investment portfolio more to act as hedge against uncertainties , inflation. But at this point of time fresh investment decision in Gold can be withheld for some time at least .

Real Estate is still appreciating but again in what form , land or constructed one . Land is limited so will always grow in value but location is very important and risk from getting grabbed by antisocial elements do carry headache . Flat or house is good option but one has to look at volume of money required and again go for location where there is cent percent more scope of growth in value.

Coming to debt and equity there is no doubt that debt was and is safer bet in short term . Equity seems very risky in short term. One can dabble in stock market and can still make money if luck is on his side but definitely not seems the case as far as equity mutual fund is concerned in short term . One has seen by experience that when short term return is very shaky and risky , confidence does not come for long term return even when fundamentals of the corporate are good . Looking at the scenario today can we say that fundamentals of corporate are looking good today . An optimist will say yes and in fact that is what should be but in reality is it really so ? What decides about fundamentals – management , consumer , competition , economy , performance etc . Is the confidence level of all very high ? . Ideally Equity is the best bet in long term and I firmly belief that it is even looking at present dampening situation today . But if I have to advise anyone on equity mf I will tell to be cautious in selecting here also . Most important is conviction about this asset and firm determination to stay invested in this asset for long . Interest in equity comes from the assessment of future earning from the business and if there is element of unpredictability in earning of corporate in short term there creates interest or lack of interest in equity . One major problem the equity mutual fund is facing is that since huge money came in short span of time when the market shot from 15000 level to 21000 level ( sensex ) , every rise in market level is now taken more to recover the losses existing in the portfolio last 4-5 years and so with more units exiting at higher level and net sales being negative , when market goes down due to FIIs action / inaction or due to some other issues the NAV goes down and starts looking unattractive and not the case of bouncing back . It is a situation where an investor the moment he starts observing upward movement in market levels and just under some serious introspection there comes the fall and the confidence which was just starting to build up breaks even more fiercely than the fragile built up .

So the moot point for investment in risky asset ( equity mf ) is conviction of investor about the asset performance , conviction that corporate are seriously involved in growing their business and  government is serious about creating positive investment climate . If devoid of any such conviction inflow in equity asset will be short lived and opportunistic only .

If conviction exists the investor should focus on those stocks or companies who have done well in all market condition and have long term investment horizon ( at least 3 to 5 years ) . Funds dominated by large cap in FMCG, Pharma looks attractive and so do new sectors like educations . But most important is the fund manager track record and his ability to withstand well in downward market trend .  One last advice to investor , don’t believe blindly on secondary source of information , do some study and fair analysis yourself also and then take investment judgment , after all its your hard earned money .

Should Investor Go for Direct Plan Post January 13 ?

Should Investor Go for Direct Plan Post January 13 ?

Recently SEBI has brought some regulatory changes in mutual fund where one if within the same scheme there will be direct plan with lesser expense ratio and lesser NAV and other will be normal plan with slightly higher NAV as it has brokerage expenses also included  . It raises the question what should be the right approach for both advisor and investor ?

First we have to understand this change brings different implication for different stakeholders in Mutual Fund Industry.

SEBI intention is to improve this business better both on qualitative side ( better advice , better product deliverables ) and quantitative side ( lesser cost ) . AMCs as manufacturers have the role to offer better products with better deliverables ( returns to investors )  . Advisors as the name itself signifies are suppose to offer good investment advice for the best interest of the client .

So if acted in total spirit of intention of this regulatory change industry is bound to gain . Coming back to investor what he should be doing – going direct or through advisor ? To me the question is not cost reduction but what value one is getting at what cost ? Client need to understand that by bringing direct plan does the role of advisor goes off ? Definitely not but in fact it becomes more relevant and necessary for client . How ?

Time is valued by most people in this world . Better and productive usage of time is key to success . In this fast moving world free time seems to get lesser day by day as apart from work hours , focus on health , mental well being through proper recreation , holidaying , networking, socialising etc are more on priority list.  Time being a big constraint how can any investor spend time to read , analyse various MF products , be updated on dynamic investment works , have a proper measure of various vagaries of risk etc . It looks easy but very cumbersome and only those can do who have interest and penchant to know and learn about the subject . Even if some one feel he can spend time on these then is it just to monitor own investment or due to real interest about subject .  Even if the investor is as knowledgeable and having updated awareness about product, performance etc still management of emotion ( greed and fear ), temptation to fall into trap, herd mentality , over reacting or underreacting to experience can not be ruled out and these things can be well managed with the association of an advisor with balanced frame of mind , unbiased approach and with mutual discussion and consultation they can take judicious decision .

People are working hard for better life , better livelihood , want to earn more and enjoy more . If earning money is important today growing and preserving growth of money is even more important and here comes the role of an Advisor . How one invest ( direct or through broker plan ) is  client decision but how well one invest is more important aspect . Investor have to understand that the role of advisor is not only at entry level but he is a guide to investor in the whole journey of investment .  One has seen the journey has not been smooth last 7-8 years but had its own highs and lows and so investor needs an advisor all the time to guide him, safeguard his interest and also ensure that his client reached his investment and financial goals well .

Even if a client decided to invest through direct plan but he should never leave the hand of his advisor who  has been providing good advice and service to him. With direct plan in place there could be effort for  allurement , temptation and also influencing on short term gain over long term benefit and it is here only that advisor will be of great help .  

MF products are most dynamic in nature considering the valuation is market determined and some short term swings can make investor uncomfortable . The reasons of such uncomfortable movements needs to be well understood and communicated and it is here the experience , expertise and knowledge of advisors comes in place .   Not so knowledgeable and less aware investor may take wrong call if not seeking advisors advice .  The service provided by the advisor can not be undermined be it sharing desired and relevant information on timely basis , analysing investment portfolio , sharing reasons on performance variables , clearing doubts if any, executing documentation and depositing process at R & T end , assessing and communicating right investment avenues matching client suitability  etc etc .

The utility factor of an advisor has to be fairly and honestly evaluated by investor . Then he needs to ask just one question to himself – Do I really need him or not ? If answer is yes then he should continue his association .  Any service has to be judged in terms of value add it offers and if there is good value add then that service also has to be fairly priced to keep economic interest intact of service provider . In this case also based on mutually agreed economic interest of both entities the relationship will continue and flourish whether it is fee provided for the advice and services or in built in product pricing . My advise to investor will be never compromise on short term small benefit for long term big gains as human relationship is not just about money and cost but concern and care about each other well being and growth and not easy to price it as well .

Roti , Kapda , Makaan Aur Nivesh

Roti , Kapda , Makaan Aur Nivesh

In good old days three basic necessity was “Roti, Kapda aur Makan”. Though this three still hold true but I feel today there is addition to three basic demands and that is Nivesh (Investment ) so now it should be “Roti, Kapda , Makan and Nivesh” .

Let us understand that today we are not having the same way of living as what our earlier generation used to live. Infact why to go back so far even the world was much different some 10 years back. Earning was less, avenues of spending were few and more of routine type, saving pattern was there but more confined to conservative financial instruments. Now more earning, more spending and more enjoyment. The world is now full with choices and varieties in every aspect of life. Roti in today’s parlance means Pizza, Burger , Dining with family at restaurants etc. Kapda in today’s world means better and modern clothing of foreign brands from Malls and Makan is not a symbolic thing to mean a roof under head but a place with modern amenities, full of facilities, electronic items etc.

Why Nivesh ? Today we have moved more towards consumerism and in a bid to enjoy we need to ask are we overspending or in other words are we underinvesting. For most people money earned find itself at two route either spending or saving/ investment. So one needs to judge is their proper balance between spending and investment ? Spending is for today whereas Investment is for tomorrow. If today is known and we want it good so tomorrow which is not so known so have to be planned well to be equally good. And so importance of Nivesh ( Investment ) becomes all the more important.

There are some needs which will be there irrespective of the fact how good or bad we change our style of living and those needs are child’s education , child’s marriage , post retirement expenses, medical expenses. Some of the new generation needs are annual holidaying , changing car and luxury items on account of new additional features or due to fashion. Even some of the present day needs like car, refrigerator, AC was luxury a decade or two back. So in short old needs have been added with some new needs also. Inflation seems to be annual regular growth occurrence. So cost of tomorrow will be much more than cost of today . So if we just spend everything today are we left for anything for tomorrow ?

Nivesh is also important because if I am having good life today I will like to maintain that in future also and that all will happen if I have right quantum of money at right time. Today we find some changing trends than our earlier generation – Private job more in demand than govt job so stability factor not that much which in turn requires plan for if some instability comes ,  pension and PF missing in many jobs so need to save to build corpus for post retirement expenses , joint family giving way to single family , childrens preferring to stay separate than parents so again save for post retirement and old age expenses , On one side longevity has increased i.e. more years to live and on other side more and frequent health problem requires more time, attention and money to stay fit and healthy.

Earlier generation believed in providing good education to their children and today it is not only good education but preferring to send children for abroad studies and so more money required at disposal at right time, earlier generation hardly thought of vocation and if it was it was to native place , to grandma place or some relatives but now the whole world is open to tour and there are annual and biannual holidays and that also does not come free but require a good amount of money. Todays marriage are not just display of rituals and a normal affair as was yesteryears it is a display of one’s status, full of pomp and show and demands big amount of money.

One major change in behaviour of young citizens of India today I see is, enjoy your life in the best possible manner. It’s a very good shift in thinking but again just as we say “past”  is “yesterday’s present”. In the same way “future”  is “tomorrow’s present “ so though present is most important in our life but future has a thread joined with present and how stronger that thread is made all depends on what best done today.

Earn, save and invest are three logical flow in terms of anyone life once he graduates from student to work. You earn because you require money for livelihood. You save because you require money for tomorrow also. You invest because you require more money for tomorrow because of rising price (inflation) and also growing and new needs. If I go back to when I started earning way back in 1989 I had never thought at that time of some of the expenses I am going to meet in future but the reality is with changing world, consumerism those came and I had to go for it. So another very important learning is tomorrow expenses may or may not known but to be met by that days’ current earning or from today’s saving (investment ). So start investing, start investing early, start investing wisely and live a very happy, enjoyable life tomorrow.