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Advisor Spotlight
Align your interests with the clients interest and be sure not just to build, but to lead
Mr Anurag Bagrodia

Mr. Anurag Bargodia of Nesture- One of the most trusted wealth advisory firm down south, who believes in having his skin in the game before suggesting clients, having built up a multi-family office believes huge opportunity lies in the segment. Be it Robo advisor or human advisors. All have a place and the market has huge opportunities for all business models. 

What is unique about him is, all that has been preached by many stalwarts in the industry, this award winning advisor actually practices it!

MF Live: It has been close to five years since you started Nesture India, a complete advisory solution from Investment advisory to succession planning, taxation, accounting. A complete solution firm. Your contribution to the industry in this span has been overwhelming. How would you describe this journey of yours?

Anurag Bagrodia: The journey is enjoyable and meaningful when you have a good companion. During this journey I have been lucky to have supportive colleagues and clients. Referring to an example of Scuba Diving where we are always paired with buddies and the most important factor is- MUTUAL TRUST. Nesture too is built on the same principal of MUTUAL TRUST between NESTURE and CLIENT. We build our AUM in a steady pace, being true to the concept of Multi-Family Office. As industry suddenly saw a jump in the Assets under management but we stayed focused on our Core Business and did not emphasize on just growing market share. We concentrated on our Core Business of Advisory which helped us MAINTAIN and ENHANCE the Client confidence and BUILD the same with New Clients. Our retention rate has been 100%.

We believe in trying to choose the right process and approach in reaching the destination. The ideas/products/managers/asset class are the routes (means) to the Financial Goal (end).

Proud to mention that our work has been recognized by UTI –CNBC TV as among TOP 3 FINANCIAL ADVISOR – South Mega Cities for FY 2014-15 and FY 2015-16.

MF Live: You were earlier connected with Client Associates and were the pioneer in building their practice in the Southern region and were also a mentor for Chennai. What are the values and practices that remain with you?  

Anurag Bagrodia: I will take a step back to my First Job which was with IL&FS Investsmart – Private Client Group Division. Here, I learned that whatever you do, never do it at the expense of Client. Ms. Mimi Parthasarathy and Mr. Nayan Sooda are the two names who inculcated the core values of always being client centric and the credit goes to them for where I am today. The two important learnings which we still practice are; a fair process and transparent approach towards the building of a portfolio. This, in turn, has helped us in building the brand “Nesture” a “The Most Trusted Wealth Advisory Firm."

MF Live: An Advisors profession necessarily revolves around five broad functions;

i) Product Research 
ii) Sales & Marketing 
iii) Client Relationships 
iv) Technologically enabled
v) Brand Building

The above are nothing but a breakup of the entrepreneurial function of an advisor. How do you discipline yourself to manage this all and how have you placed yourself regarding all the above?

Anurag Bagrodia: Let us combine Sales & Marketing, Client Relationships and Brand Building.

As an Advisor, we sometimes get stuck to why and what we are doing and how we are different from others. In this process, we forget what Client’s need and their expectations are. We tend to hear only their WANTS (wants may not be realistic). My NEED is a car, but I WANT SUV. It is like an iceberg which is 10% above the water and 90% under it. We have to understand their NEEDS, which is 90% of what they have not spoken about. 

Therefore, we begin with suggestions that compliment their existing system and do not try to replace their existing system. We try to address the missing link first.

We at NESTURE believe that there are no better sales and marketing methods than a GOOD WORD from one client to another. This helps us build our BRAND.  

As stated earlier, any relationship can sustain in the long run by building TRUST. Unlike popular belief that Client entertainment is equal to Retention of Client Relationship, we do not spend time and money on such activities but rather engage with them at Family level. Our Brand “Nesture” is the combination of words Nest and Nurture i.e. nurturing the Nest. 

The whole thought process is that clients should be able to think of us as an extended member of their family. This will enable them to share their ideas, views, most importantly the dilemmas revolving around succession planning, matters with immediate family members, possible eventful fears, etc. This enables us to perform our duties more efficiently, and clients have someone who does not only listen to them but also provide the solutions. Thus our tagline: "Beyond Wealth Solution."

In Research, the first factor is that it has to be done objectively. Thus, as a rule, we decided to deal only with Third Party Products and ideas, so that we are unbiased. Before recommending any products to a client, we collect data from internet, industry, media and friendly competitors. We are committed to and focus more on assessing the RISK in each and every idea we look at, which helps in identifying how deep the Pitfall will be? We believe that Return is linked to the market conditions. Once we assess the RISK, we evaluate what other options are available at the same level of risk. Finally, we come down to the assessment of the process and the return generated for the Risk.

It is again important to know that every product cannot be just assessed based on the Risk Vs Return. To give an example, the evaluation process will be different for Equity Mutual Fund and Equity Portfolio Management Service (PMS). In the case of PMS, we have to have to assess the success rate of the stocks chosen, distribution of the stocks along the return curve, etc.

Technology: In today's world Technology plays a vital role, and we are working more towards it. There are two parts of it. One, the technology used for analyzing the ideas and portfolios. There we do not see much of a challenge as we can buy off the counter software like Morning Star, CRISIL, Value research, etc. The challenges are in execution of the ideas. People have been only focusing on executing Mutual fund investments online. But as we know, there are many more areas like Bonds, Debentures, PPF, FDs, PE, REITS, etc. There are no solutions of integrating the same. Thus, my belief is that it will take some time before we can move complete paperless. 

MF Live: What essentially goes into your way of looking at mutual fund products? How do you pick the funds? Which are your top picks?

Anurag Bagrodia: Let me break it into two parts – Debt Funds and Equity Oriented Funds. 

Debt Funds: In the case of Debt funds, first we try to understand how yield curve will behave in the future, Govt Policies, global phenomena and then decide how to balance duration and accrual funds. This is important owing to taxation considering the minimum investment horizon is 3 years. The second step is choosing the right funds. We comb the fund holdings and colour code them based on the papers they hold– group companies, business houses, promoters, ratings, etc. The second level is to see their current Yield to Maturity, Maturity profile, expense ratio, G-sec holding, etc. We then identify who is the fund manager and how he is managing the existing fund and how he has managed the previous funds. We peek into the returns generated and decide the various schemes. Thus, it is a forward-looking approach.

For Equity Funds, we have to analyze the past data and then look at Fund Manager track record, the sectors and in which market capital they have invested, how true they are to the label of the schemes. We do not give any weightage to the AUM. We internally rank the funds based on several ratios like Trenor, Sortino, Alpha, Beta and Rolling Returns. Later, match our ratings with Morning Star or CRISIL ratings.

We stay away from New Fund Offers unless we see the differentiation and value addition to the portfolio. Also, avoid sectoral funds unless we very bullish on any sector.

MF Live: What is your view on the MF advisory space and the industry penetration? What will be the dampener and the booster for the advisors?

Anurag Bagrodia: The Mutual Fund industry should be growing at the pace of 15 - 18% per year in next 5 years. This may look unrealistic, but between 1993 and 1998, the industry grew by 20% p.a. in the USA and Europe by 18% p.a. If you see, the MF industry is around 16 to 18% of the Fixed Deposit savings in the country. We have countries where the MF industry is bigger. We being a country who believes in saving for next generation, we may not surpass FD in the near future, but the gap will start narrowing. My guesstimate is that only around 10% of the household have investments in mutual funds in India. The MF investments are close to 3% of the total investments by individual in financial assets. Our MF AUM/GDP is around 7% compared to Brazil (40%), Spain (20%) and Mexico (10%). Our GDP to world GDP has grown close to 3% whereas Market Cap to World Market-cap reduced to 2.3%. All the statistics suggest that MF industry may double in next 4-5 years, close to 30 trillion INR. The challenge was banking access. Close to 35% of the households in India do not have banking access. But this will change too.
To achieve this, the industry needs a catalyst called Financial Advisors. It will be both in the form of ROBO as well as Advisors like us. The reasons are simple. The ROBO advisory will be able to cater to retail segment, mass segment and those who are savvy investors. However, for those who are going to move from traditional savings to MF, they will need advisors at their home. People are conservative and need to be taught not only about MF but first about Financial NEEDS. Many do not understand inflation, the art of compounding, taxation, etc. If I look through my LENS today, I do not see any dampener but vast opportunities in this segment. There will be regulatory changes (good and bad), but one has to accept and build the practice within the framework.  

MF Live: What is your area of practice? Retail, HNIs, ultra- HNIs? What do you think is unique to the segment? What are the requisites to sustain in the segment?

Anurag Bagrodia: At Nesture, our core business is Multi-Family Office. As the name suggests, client’s financial department is outsourced to us. This segment is required by HNIs having an investible surplus of Rs 5 Crore. 
REQUIREMENTS/ DEMANDS of the SEGMENT: This segment though highly knowledgeable requires someone who can step into their shoes and do all the pre-requisites like planning, analyzing, executing the portfolios. It requires someone, who can bring them ideas and products from various sources including from the competitors. Advising the clients on their Succession Plan and maintaining their book of accounts are vital. The Continuity Risk is another important area why they need someone like us. They can be sure that in the absence of them, someone will be able to manage the financial affairs for the family seamlessly.

ESSENTIALS to SUSTAIN: To sustain in the segment, one has to be very vigilant of what is happening around in the financial market. Understand the environment and economics. You cannot be a ROBO advisor as each client has different needs and one has to bring the solution to the table accordingly. Even though the client may have the ability to take the risk but we have to construct a portfolio based on their willingness. As I stated earlier, you have to work with your competitors considering they may have a better solution too. Adopt, accept and work along with them is the best strategy. Give the best of the service, and let the client decide what to give and when to give. Build the Trust but Never break it once built. Advisory being the only business unlike banks and institutes, we have to maintain our standard of Advice and Service to sustain in the segment.

MF Live: What according to you is the future of the profession? Let us assume the RIA consultation paper will be implemented. How in that case do you plan to align your business? 

Anurag Bagrodia: For the various reasons mentioned earlier, I see lots of opportunity unfolding in future for professionals like us. However, the key elements will be Trust, Integrity, Clarity, Process orientation, apart from possessing excellent academic skillset. 

The recent clarity from SEBI will help us to migrate to RIA as the consultation paper states that 3 years would be given and the old investments need not be disturbed. This will be in the best interest of the Client as well as for the advisor. However, there are ambiguities as only one product (MF) offers the direct option. What would happen to the other products advised by RIA? The client would have to pay an advisory fee as well built-in cost to the executor of the product, assuming RIA cannot execute the same. Thus, we have to find the solution to some of these issues. 

We have started dialogues with our clients, understanding their concerns and will be designing the formula taking the consensus. We will not indulge into a price war with others. The fee will be based on the Service, AUM and a couple of other parameters, which would differentiate us from others and retain the client.

MF Live: What is the unique approach at Nesture?

Anurag Bagrodia: We at Nesture firmly believe and practice the concept of having Skin in the Game, wherever possible. Align one’s interest with that of Client. We at individual level try to invest in the same ideas or Mutual funds schemes just as Scuba Diving Buddies have to swim together always. We have chosen PMS where we have seen promoters own substantial wealth is as well embedded. If possible, we do a pilot run with our money before adding into client's portfolio. In my entire 15 years of career in this field, I have not sold any ULIPs to my client as I firmly believe that insurance and investments are to be kept separate unless we see a substantial reduction in costs.
MF Live: Your message to budding IFAs & Fellow Channel partners?

Anurag Bagrodia: The industry has gone through many changes in last few years trying to rattle many IFAs. But those who managed to float in the open ocean and find the shore have been True to their Core Business of Pure and Unbiased Advisory. They have not been impacted with direct, clawback clause, no entry load, no upfront, etc. 

Be sensitive to the client and do not try to earn brokerage, fee, commission, incentives, and bonuses at the expense of clients. If we as an Advisor Fraternity perform our duty in a righteous manner, then we do not have to worry about ROBO advisory or any Regulatory Changes. 

What I have learnt is, not to worry about the competition as clients are intelligent to see who is working in their interest and who are not. Good Advice with Great Service will always help you retain your clients. If this is going to be your profession, focus on building your Brand HONESTLY.

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Comments Related To This Article
  • Name : chaitali sil
  • Comments :
  • what should be the allocation of SBI BLUECHIP fund on one's portfolio who wants to invest first time in mutual fund at this sensex level.age is about 45 with a income of Rs50000 P.m.
  • Date : 5/28/2017 10:57:00 PM
  • Name : avijit Chakraborty
  • Comments :
  • I started a sip for SBI blue chip fund last three months,I want to carry on for 10 years,it is only savings of mine.sip amount 2000,can I continue this with out worry?
  • Date : 5/25/2017 7:52:33 PM
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