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Bengaluru-based adviser Lovaii Navlakhi feels fortunate to be part of the first batch of the Certified Financial Planning (CFP) program introduced in India in 2004. Navlakhi, the managing director & CEO of International Money Matters— a firm that he started in 2001, says financial advice was formally introduced in the country in the mid-2000s and that he is among the first few people to charge fees for advisory services in India.

International Money Matters, a Sebi-registered investment advisory firm with assets under advisory (AUA) of around 1,800 crore, is majority-owned by Gopal Srinivasan, chairman of TVS Capitals (in his personal capacity). Navlakhi holds the remaining stake and leads its operations. The joint ownership, he says, is to ensure the continuity of the firm, which has 400 families (including NRIs) as clients and employs about 50 individuals currently.

An RIA's journey
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An RIA's journey

Navlakhi, who won the global PlanPlus Financial Planning Award 2018 from the Asia region, also serves as a leader for the Certified Financial Transitionist (CeFT) program in India; CeFT members are trained to help clients navigate through major life events and financial transitions.

Navlakhi shares his journey as a financial adviser in this special series commemorating a decade of Sebi’s regulations for registered investment advisers, or RIAs (Mint has been speaking to advisers who have completed or are nearing a decade in the profession). Edited excerpts from an interview:

Describe your career before you became an RIA?

I spent 18 years working with corporates based out of Mumbai and Bangalore. I have always had an interest in personal finance and I found that intermediaries at that time were not acting in the interest of the client. In 2001, when I was laid off from my then job and was in search of another, I started Money Matters to educate a few individuals about investments by avoiding jargon and being transparent. The RIA regulation only validated the approach we have always had and hence we were quick to get that licence in 2013-14.

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What prompted you to get into the financial planning space?

Let me share one of the motivating factors. In the early 2000s, one of the foreign funds that just came to India gave me a questionnaire and upon filling it, they calculated a specific amount that I needed to save every month to fund the education of my younger child. That amount was more than what I was earning at that point in time, and I wished somebody had told me about financial planning 10 years ago. I think that played a big role in deciding the path that I took.

Who was your first client?

My first clients were my former colleagues who asked me to manage the settlement they received at the time of their exit from jobs in 2001. Within the next year, they suggested that I charge fees for this service. I was initially taken aback, but that prompted me to launch my own market research (it took me nine months to do so) and to figure out an appropriate fee structure. I was one of the first ones to charge fees for investment advisory in India.

You have been in this space of advising clients for more than two decades. Tell us what has changed after the 2008-09 crisis.

It was a great learning period for me. Till then, I never believed in risk profiling. In 2007, when the markets were good, one of my clients insisted that we increase his equity exposure from 60% to 90%. With a lot of reluctance, we raised it to 70%. After the crisis, when the portfolios were down 30-50%, the client retorted: “you have known me for many years. How could you keep such a higher allocation to equity?" This was a wake-up call. It made me realize that an investor who claims to be willing to take risks is actually not ready to make losses. Ever since, I have used scientific risk profiling to determine the risk a client can take.

How have things changed over the last 10 years?

The market has really expanded —clients understand the value of advice and are willing to pay fees; most importantly, they ask the right questions before selecting a financial adviser. The advisers’ knowledge base, too, has improved. Markets are also no longer immune to the impact of global economic changes. In tune with the changing times, product offerings have become wider and deeper. The media has also played an important role in creating awareness.

What is your proudest memory of serving a client?

There have been many such instances. I have had a client who moved to various countries such as Indonesia, the US and Japan. Helping him with his tax data, bank accounts, types of investments and reporting as per the requirements of all these countries is one of the good memories. In another case, I remember suggesting to a client that the only way he could meet his financial goals was to earn more. He was the co-founder of a firm and tried to negotiate a higher pay there. When he couldn’t get what he wanted, he left the firm and flew to the Middle East for another job, which helped him earn and save more.

Do you have any regrets, about something you recommended in good faith but were not happy with?

We suggested that our clients invest in IL&FS securities to earn a slightly higher return. We later learned that it did not make sense to compromise on safety or get greedy about returns. The learning from ILFS crisis helped us a lot in the Templeton case (In April 2020, Franklin Templeton Mutual Fund announced the winding up of six debt schemes) because we started to continuously analyse the underlying instruments, and we were able to exit from most schemes six months before the winding-up happened.

Do you heed your own advice?

Yes and no. No, because my goals, my risk profile, and my experience with money may be quite different from that of my clients. Yes, because I do believe that every individual needs a financial adviser. It is impossible for me to control my emotions while making financial decisions even if I have the time and understand finances well. So, one of my team members is my financial adviser; in our discussions, my role is that of a client, not that of a CEO.

What’s the hardest part of being an adviser?

We, as advisers, need to remove our personal biases when offering advice to clients. Real estate as an investment may be good for one client and not for another; the same may be true of other investment vehicles. Further, there are times when we absolutely believe that our advice is in the best interests of the clients, but they are unwilling to accept it. Ultimately, getting the client to act on our advice is the objective, even if it’s not the shortest route.

What’s the most important reform that should happen with regard to the RIA rules?

A young client who is just starting to invest requires only basic financial planning exercise. On the other hand, a client with 100 crore of assets requires various services, including succession planning. The degree of knowledge I would require to handle both clients is different.

I believe that there should be segregation of products into simple and complex; investors into retail and advanced (accredited); and intermediaries into those with basic knowledge and those who are qualified. Currently, we have one regulation dealing with every adviser. If we can segregate and regulate, that will remove the burden of over-regulation in any one category.

Elsewhere in Mint

In Opinion, Siddharth Pai tells what Indian IT sector’s TWITCH group needs. Diva Jain explains what makes an industrial policy good. Sandipan Deb writes about the American deep state’s sway on public debate. Long Story reports on how the auditing industry is set to change in India.

ABOUT THE AUTHOR
Satya Sontanam
Satya Sontanam is a senior content creator at Mint with a keen interest on data crunching, analysis and the story behind trends. She writes on personal finance including investments, regulations and data stories. Before joining Mint in December 2021, Satya worked as research analyst and also a personal finance writer at The Hindu BusinessLine. Satya is a qualified chartered accountant. In her free time, she enjoys doing yoga and listening to podcasts.
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Updated: 10 Jan 2023, 04:21 AM IST
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