In this week's edition of Interviews by SM, we are pleased to present Renu Maheshwari, SEBI Registered Investment Advisor and co-founder of Finscholarz Wealth Managers LLP, a Chennai-based Financial Planning, Portfolio Management and Advisory firm. Mrs. Maheshwari is Tamil Nadu's first SEBI recognized RIA, and Finscholarz Wealth Managers was Runner-up at the Outlook Money Awards 2015 "Best Registered Investment Adviser" and the Winner of APAC Insider "Best Independent Personal Finance Adviser - India 2016."
She will also be the host of SimpleMoney's free, upcoming workshop on "Goal Based Financial Planning," held this Sunday, March 11 2018, at the IIT Alumni Center, Chennai. You can RSVP for the event here.
At a glance:
When I started my career, I worked in the corporate sector, and like many mothers in the world, I took a break after I had a child. When I was ready to return to work, I found it difficult to find a flexible career in the corporate world - one that would allow me to still fulfill my duties as a mother. I knew I couldn't work for twelve hours with a child, and so I started considering personal finance. Along with corporate coaching and consulting, I built a career in providing customised personal finance solutions to my clients.
Right from the beginning, I didn't believe in selling a product or getting a commission. So in 2011-2012, when SEBI started talking about changing the rules to move away from the existing "sales-based model," a space opened up for me to create a practise that didn't exist in the country. My beliefs were already aligned with the idea that products shouldn't be sold. In 2013, SEBI's rules became mandatory and the services that I was providing become more widely accepted. We were ready for the regulations - in fact, we were waiting for them.
My model of fee-based financial advice didn't really have legal sanctity until SEBI's sanctions came in; until then, other people were clubbing us in with the distributors who were paid by Asset Management Companies (AMCs), with money taken from an investor's funds, which meant that there was barely any transparency over how much money the distributor was making.
My first ever client was my husband, who went on to co-found Finscholarz with me. He's the one who nudged me towards my current business practice. Over the years, he kept telling me, "you're doing it for me and I see everyone around me making foolish mistakes and they don't have anyone to correct them."
So it started out as an unpaid job, but later on, I got my clients through financial planning workshops that I provide. I remember how, at one of the first workshops I held, a lady who attended went back and told her husband, "this is how Renu does it. Why are we struggling so much if she can help us?" Her husband came to see me, and they became one of our first clients to entrust their entire portfolio with us.
My relationship with money was influenced greatly by the fact that I come from a community where people think about saving before spending. My father was very organized with money, carefully recording all his financial transactions. He would always say that it's difficult to put together the "first one lakh." One lakh was a big deal forty years ago, but after the first lakh, he maintained that it would become a lot easier to save.
My siblings and I started getting pocket money from 4th class, and it would increase a little bit every year. No questions were asked about that money. I would save up my money and at the end of the month, I would buy those scented rubbers and stationery that I really loved.
I come from a society and a time where women didn't talk about money, nor did they have control of, or access to, it. Even so, being a finance professional came to me naturally and my husband was not averse to it either. Even now, providing financial empowerment to women is a cause close to my heart.
I started saving from the days of my internship. I saved my stipend to fund my Luna Double Plus, my trusty vehicle that took me around. My first salary was Rs. 1800, and my only expenses at that time were the cost of fuel and the occasional outing with friends.
My first real investment was land. In 1991, my husband and I purchased some land in Indore. At that time, the stock market in India was barely alive. We had some fixed deposits, insurance schemes and some IPOs, but we were wary of putting a lot of money in IPOs because the stock market was not too regulated. There were few research sources and brokerage companies were not hard-wired or transparent.
Till the late nineties, my family's main investment was in land, foreign currency (my husband travelled abroad on projects), fixed deposits and UTI mutual funds and some gold.
We started moving money into the market in the early 2000s, after SEBI was formed and markets became more regulated. The tickers on business channels made it easy to track the market, and provided a sense of transparency that was reassuring. I did trading on a few scrips for more than a year, and realized how it can be a zero sum game in the long run. This experience was valuable as it helped me understand the core principles behind why I invest in the financial markets, and today, that helps me with my practice. I don't do anything with my clients' money that I wouldn't do with my own.
I don't believe that it's a good idea for people to spend their salary before they get it, lining up their future with a long line of EMI payments. I also don't believe in the greed of making quick money. Today we see it with the bitcoin mania that is sweeping us up, with people hoping to make money quickly. We also see it in people who trade in the markets.
When I invest on behalf of my clients, I do it for the long-term, to ensure that they are able to retire without worry, and are able to meet their short-term expenses. This is investing. When I invest in equities, I am essentially buying a company and believing that it will grow. I have done my research about the company, have placed faith in it, and have decided to stay with it for the long-term.
Traders on the other hand, are short term players in the market, who are only interested in short-term movements. I've had some brief experience with trading, but it's not how I generate long-term wealth for my clients. There's a difference between trading and investing in the market. When you trade in the markets, you are betting in the short term to make money, and not really buying into a company to grow. I don't have anything against this business - after all, it provides liquidity to investors like me. But I don't think it's for everyone, and it's best left in the hands of professional traders - women and men whose job is to trade in the markets. The problem lies when small investors without a background or any acumen treat it synonymously with investment. A lot of them trade, loose the money and say "oh, the stock market is not for us." This creates the perception that the stock market is a dangerous place for everyone and that you'll be "playing with money" when you invest in it.
I think some people spend too much on jewelry, believing that it's an investment, or they buy houses as if they have to house a family of fifteen, often burdening themselves with EMIs to meet the cost. I also sometimes see people splurging too much on children and providing them with material (not educational) benefits. I too did it with my son at the beginning, and soon realized that no toy was making him happy. I decided to let him want it and ask for it, and truly derive pleasure from it when he finally got it.
Splurging is a relative term, based in large part on affordability. I think the important question to ask is, "Can you afford to splurge?"
Some of us, for reasons specific to our own circumstances, don't start investing and saving until later in life. If you start at the age of forty-five, it's important to make sure you'll be ready for retirement. Start by creating an emergency fund. Place your short-term funds in fixed income securities, and the rest of it in aggressive equity markets to help you build your retirement fund.
If you're starting young, at say, twenty-five, it's quite simple. Aim to save 50% of your income. Fill up your tax-saving schemes like NPS and EPS. With the remaining money, place 75% in equities and 25% in fixed income securities for short-term requirements.
I am not saying this just because I am an advisor, but because it's good advice: get help for your money. Money today has become a complicated affair. It has changed a lot from how it used to be in our parents' and grandparents' generation. Identify who you are getting help from, and get someone who works on your side, and not someone working on commissions.
A financial advisor can help you greatly, acting as a financial therapist of sorts. But always ask yourself if the person who is helping you is an advisor or a distributor who happens to be really nice to you. You need an advisor to actually understand your problem.
Getting financial advice from a distributor is like asking your friendly neighborhood chemist to diagnose and medicate you. As friendly as he might you, it's not his job to do that.
There is a misconception amongst some people that you can only have a financial advisor when you have crores of money in your corpus. That's not true. It's affordable to everyone, even youngsters. If you think you need help, go to a SEBI Registered Investment Advisor and pay him/her the fees. It will influence how you prioritize your financial goals and make sure you meet them. The fees are worth it. People need to get out of this mindset that it can't be affordable; it's wrong.
All youngsters who don't find any place, come to Finscholarz, we charge a one-time fee to help you set up a portfolio for the next three years, based on your unique life situation. For those looking for more hands-on help, we also have an annual fee-based model. To learn more, you can write to me at [email protected].
Once you've taken this great advice into consideration and built that beautiful portfolio, track it using SimpleMoney!