Sadique Neelgund, financial planner, Sykes & Ray Financial Planners, in an interview with Yogita Khatri of myiris.com shared his views on SEBI-IRDA spat over ULIPs, what are his plans for 2010 in terms of product portfolio, new services, etc.
Sadique Neelgund, a financial planner by profession practices fee-based financial planning with Sykes & Ray Financial Planners. He specializes in offering comprehensive & life-cycle financial planning services to his clients who include middle level executives, double income couples, professionals and small business owners. Prior to setting up the practice, he was designated as the business head of Sykes & Ray Financial Planners and was in-charge of establishing operational excellence at par with global standards and drive marketing & business development initiatives of the division. Sadique earlier was with Financial Planning Standards Board India (FPSB India) managing varied responsibilities like membership development, IT initiatives, corporate communications & international liaison. He was also designated as assistant editor and managing the editorial of Financial Planning Journal, the premier publication for Financial Planners in India. He is a management post-graduate by qualification and a Certified Financial Planner (CFP).
> How and when did you join the financial advisory services profession? How has been your journey?
My entry into financial planning profession has been by choice rather than by chance or transition unlike many. I was preparing to get into the profession right from my MBA days and took up summer and winter projects with HDFC Bank and Citibank in their financial advisory divisions seven years ago. There was a huge gap between what the clients needed and what was being offered to them. There was an erroneous overlap between sales and advice. This had to correct with time and I figured out that Financial Planning would be the answer to this. After my studies, I was fortunate to be placed with Financial Planning Standards Board (FPSB) India - the body which is spearheading the financial planning movement in India. After working for four years in various managerial capacities, I joined Sykes & Ray Financial Planners which has been one of the foremost institutions in India offering fee-based financial planning services. The journey so far has been exhilarating and I think the profession has got the initial breakthrough as people are now opening up to fee-based advice while regulators are facilitating the same.
> How would you define your business proposition? HNI focused / retail focused or a mix of all segments? How has your business model changed over the years?
I practice fee-based financial planning and specialize in offering comprehensive & life-cycle financial planning services to clients who include middle level executives, double income couples, professionals and small business owners. There is a difference between wealth management and financial planning; I offer the later whereas HNIs require the former. My focus is completely on retail clients who have limited income but numerous goals to fulfill in life like funding children`s education & marriage, independent & comfortable retirement, purchase their dream house and arrange funds for little luxuries in life like car & international vacations. And also ensure their financial wellbeing by insurance planning and tax planning. I have started with this business model and would prefer to stick to it.
> Out of the several changes that advisors now have to face, which one is a more difficult one to cope with?
Most of the changes in the industry that have taken place and that are expected to take place are to enable client-centric advisory practice. This is the bigger change that advisors have to cope with. It`s an expected evolution that was bound to happen as the industry matured, although I am of the opinion that changes have not been effected by the regulators by creating the right environment. Anyways, advisors need to accept this fact and start preparing themselves for the new business environment. Train themselves for knowledge & skills, introduce value-added services, put technology in place, and broaden their products & services basket. All these will help an advisor to not only survive but also achieve greater heights in the marketplace.
> What is your view on this whole ULIP issue? How do you see this issue getting settled?
As fee-based financial planners, we have never recommended ULIPs to our clients as they have high charges of various kinds. It`s economical and profitable for investors to separate their investment needs and insurance needs. With the SEBI-IRDA spat over who is going to regulate ULIPs and the media attention this issue is getting, the investors have come to know about the nature of this product. Now whoever wins in the court, one thing is for sure that there will be changes in the product features like higher sum assured and lower charges/costs that will be in the interest of investors. ULIPs are good products except for their notorious charges.
> What are you recommending to your clients on the fixed income side?
Non convertible debentures (NCDs), corporate deposits, post office schemes and MIPs (monthly income plans) form the core our client`s fixed income portfolio. We advice a combination of these instruments based on available opportunities and market conditions.
> There is a view that no loads and reduction in upfront commissions have really hurt small IFAs and the retail business. Is this a view that you also share?
Yes, no loads and reduction in commissions have really hurt not only small IFAs but also the bigger distributors. And on a positive side, most of the advisors have kick-started their transition to fee-based business taking the change forced upon them with the right spirit and preparing for the new client-centric financial advisory business landscape.
> In an advisory business, where clients place their trust in you personally, how do you manage to scale up and grow without losing touch with your old clients?
Yes, this is a real challenge for financial planners whereas in a transaction based business this is fairly simple. Clients are more demanding and also deserve your attention once you have charged a fee to them. A good CRM software and good use of internet and mobile technology will play an important role in addressing this issue. Though a good CRM package for financial planners is still not available in India, I am already exploring the use of web and mobile for regular client communication. Also I make it a point to call them regularly to check with their progress on plan implementation.
> What are your plans for 2010 in terms of product portfolio, new services, client segments etc?
2010 will be very critical as the fee-based practice is gaining momentum it rightly deserved. On products, I am exposing clients to ETFs and indexation. I plan to stick on with the comprehensive and life-cycle financial planning services for retail clients specially the middle level executives and professionals like doctors, architects and CAs as I believe there is a lot scope in this area.
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