13th December 2011

WF: What inspired you to leave a successful career at Standard Chartered Bank, and set up your own independent practice as an advisor?

Dhrubajyoti Datta: Actually I started my banking career in 1995 with ANZ Grindlays Bank. Later the bank was taken over by Standard Chartered Bank. This changed the work culture and also the business models. There was a lot of shuffling of employees positions in all branches and I was also transferred. Lot of customers were not satisfied with these sudden changes. Despite me no longer being their RM, they called on me for banking and investment solutions. It was then that I discovered myself as a personal financial consultant rather than just a bank employee. This thought made me feel that I can go beyond the stipulated job of an employee and start my own practice as an independent financial advisor. So when some of my very close clienst gave support to go ahead with this transition, I resigned from the bank and I started out on my own. Over a period of time more and more clients, through word of mouth and references began to come to me and I never looked back. I quit the bank in June 2003 and started my practice from July 2003. The timing unexpectedly worked to my advantage - it was the start of the bull market.

WF: What were some of the challenges you faced in the transition from employee to entrepreneur?

Dhrubajyoti Datta: The foremost challenge was that, I was accustomed to a complete automated work environment with very good infrastructure. Setting up an office with basic infrastructure was the first challenge. Lack of support staff, MIS reports, data keeping, lack of systems, lack of readymade research - all these were the first set of hurdles that I had to cross.

Second challenge was about getting the revenue stream going. Leaving the comfort zone of monthly salary was a big challenge. Third challenge was time management - there is no fixed pattern of working hours. In the first two years, whenever my clients called, I used to attend the call.

Keeping myself abreast with all the latest information and research on my own was a habit I had to develop - I needed to maintain my clients' impression of me as a knowledgeable person. For that, I had to make the effort myself - through a lot of reading.

WF: Looking back at your own transition, what advice would you give to professionals who are considering this transition from employee to entrepreneur?

Dhrubajyoti Datta: The foremost point is that they must have customer support. In my case, this was a major confidence booster that enabled me to make the transition. That means you must have the complete trust and rapport with the customer. Inter-dependence is the key to success in this business. I depend on my customers and my customers depend on me. If interdependence is not there, you are on a weak wicket. The fact that both need each other is what sustains the relationship over time. So, that's the first and most important thing you need to assess - do you have a sufficient number of clients who depend on you for good advice and on whom you can depend to get you started as an entrepreneur?

The second parameter you need to introspect on is whether you think you are capable to run without the support of a big brand. A very frank personal assessment of whether your clients trust you or the brand you work for is critical. An ability to replace the brand with your own identity is crucial for success.

Capital costs are not high - but with today's margins, don't expect a quick break even. Don't expect to make a lot of money quickly. If it is the lure of money that is motivating you to consider entrepreneurship, don't become an advisor. Become an advisor only if you have a true passion for this profession and if you believe that the work culture in the company or bank you work for does not enable you to live this passion. That should be the main motivator for considering a shift - passion for this profession and a strong sense of doing what is right for your clients.

You should aspire to win the respect and confidence of your clients - just as a good lawyer or a good doctor does. You are a professional who is here to provide financial solutions to your clients and help them achieve their financial goals. If that is your frame of mind, you can succeed as an advisor. And finally, you must recognize that just like with any other profession like doctors and lawyers, the more experienced you become in the field of financial advisory, the better is the remuneration that you can expect. That should be your aspiration, your aim.

WF: How has your own journey been from 2003 to now ?

Dhrubajyoti Datta: My journey since 2003 is just like the Sensex's movement ! From 2003 to 2007, growth was strong and then came the big crash of 2008. Like everybody else in this profession, my AuM too suffered a drastic fall. Then came 2009 and 2010 and some clients who missed the bus earlier climbed on board and my AuM recovered to some extent. Just as I was adjusting to the AuM roller coaster ride, entry loads were removed in 2009 - and revenues were severely hit. I had to go in for big cost cutting. And now, we are all grappling with the new regulations and figuring out what should be the business model of the future, where we can focus on advisory services.

WF: Do you charge for advice? How comfortable will you be to shift to a pure advisory model as envisaged in the concept paper for regulating investment advisors?

Dhrubajyoti Datta: Clients from abroad are more ready to pay fees - in fact some of them volunteer to pay for advice, even when I don't explicitly ask. But domestic clients is a different story. Charging fees is still a challenge. But clients have their own way of showing you their appreciation through small gestures. For example, when I opened my first big office in 2007, one of my clients gave me a cheque for an AC in that office ! When clients are happy, they show their appreciation in many ways. But when returns are poor - like now, I don't think I can look towards another cheque for another AC ! The point is charging fees at a fixed rate irrespective of portfolio returns can be quite a challenge at times when portfolio returns are not up to expectations.

I do talk to my clients about how my revenue model has suffered, how costs have come down for them and then I leave it to them to agree a fee structure they are comfortable with. With some clients I have a fixed annual or monthly remuneration, with some its a small percentage of AuM. What is important is that clients should feel that they are in a win-win arrangement.

WF: What is your business model in terms of client mix, products, AuM?

Dhrubajyoti Datta: My business model is that I am a solution provider for my clients, to help them meet their financial goals. I give financial advice to around 100 clients of various ages from 25 to 75 years. My clients are from various professions ranging from medicine to or marine engineering and most of them are in medium networth category.

The four pillars of my model include a solution driven approach, service at their doorstep, involvement of the family in all decision making and a focus on sharing financial knowledge.

My wife and I run this business together. She is also an ARN holder. Our AuM is around Rs. 25 crores, of which about 70% is in equity funds. We have a two member staff team for field work, transaction execution etc.

WF: What is your perspective on online platforms - are they relevant for your business?

Dhrubajyoti Datta: No, not right now. Online models will be more in demand when customers understand their needs better and can match products that suits their need. For this to happen, lot more financial education is am focusing more on imparting that financial education and less on online platforms.

WF: You have closely observed bank distribution as well as the IFA fraternity. What in your view will be the key success factors that will determine winners of tomorrow?

Dhrubajyoti Datta: Anybody who adopts a solutions based advisory approach and shuns product selling will become successful - irrespective of what channel he is working in. Unfortunately, I still see so many people who are reluctant to give up their product selling approach and convert to solution providers.

The other factors - which we are all aware of - include adaptation to change, continuous upgradation of skills and knowledge and usage of latest technology. But, in my view, adopting a solutions based approach will be the key determinant factor between success and failure.