One of the 5 pillars of growth that Think BIG articulates is "Upskilling" - the need to equip yourself with the skill sets required to execute the business vision you have set for yourself (Click here to read more about the 5 growth pillars). Ramesh Hegde went one step further : he not only equipped himself with the skills sets for the financial planning profession he chose, which was unknown in the small town of Davangere in Karnataka, but also focused a lot on equipping all his clients to become financially aware and enlightened investors. He is the only actively practicing financial planner in North Karnataka, and his unique journey has seen his AuM grow from Rs. 80 lakhs to Rs. 26 crores in just 3 years. He grew not just by upskilling himself, but by upskilling his clients! What's more is that all his clients pay him an annual fee for his valuable advice and guidance. Read on as Ramesh Hegde narrates his remarkable story and you will get a good sense of what made him the most deserving recipient of the 2014 Think BIG Award for Advisory Excellence (Non-Metros).

From automobiles to financial planning

I am an automobile engineer and ran a Maruti service station here in Davangere. I have 25 years experience in the auto industry. Several years ago, I ventured into some other dealerships and sustained huge losses. When I exited that business, I took stock of what went wrong. I realized that I failed because I did not plan my finances properly. It was a subject that was alien to me then.

I then began to study more about financial planning and that led me to take up the Certified Financial Planner course. Spurred by my understanding of financial planning, I resolved to make this my profession and went on to complete my CFP. I commenced my financial planning firm in Davangere in 2011.

Davangere is a small district in Northern Karnataka - the population of the entire district is 6 lakhs. There are two main activities here : agriculture and education. We have 4 engineering colleges, 2 medical colleges, 2 dental colleges and 3 MBA colleges. We grow paddy and maize here. But, we don't have any big businesses or industries or factories here.

I am a professional, not an agent

When I commenced my practice, I was clear that I am going to position myself as a professional, not as an agent or broker. I fully understood from an investor's point of view, the need for proper awareness of financial planning and the value it brings into the financial life of people who are not financially savvy. I learnt it the hard way, and I thought if I can guide the people properly, they need not go through the pain I went through, due to lack of financial knowledge. My mission was very clear : create financial freedom for all my clients.

Education classes

I started my efforts with education classes in my office. At first, I invited people I knew from my Maruti dealership days, to attend these 2 hour sessions. I start these sessions with 3 statements:

1. - I am not going to sell you anything today

2. - I am not an agent

3. - I will, in the next 2 hours, show you where you are and where you want to be, financially.

This usually gets them interested. I then proceed with a highly interactive session where we discuss some of these issues:

1. - What is money?

2. - Expenses and projecting future expenses

3. - Effect of inflation on future expenses

4. - Difference between savings and investment

5. - Difference between risk and loss

6. - Managing and reducing risk

7. - Benefits of financial planning

At the end of each class, I would request participants who found the session useful to inform their friends and relatives to call my office and register for a class. As and when we got 20 registrations, I would conduct a class - my office can accommodate only 20 people at a time.

Over time, these classes have become very popular, and today, I conduct 2 classes every week. We have a regular stream of people calling up and registering for the class. Today, my conversions are above 90% from these classes. It is these classes that have not only made so many people financially aware, but have directly contributed to my business growth.

Ramesh Hegde conducting his class : 20 investors at a time, 2 classes per week

Education classes helped my business grow

I closed my first year in 2011-12 with an AuM of Rs. 82 lakhs. Next year (2012-13), AuM grew to Rs.3.5 lakhs. Next year (2013-14), my AuM touched Rs.10 crores. Today (2014-15), my mutual fund AuM is Rs.18 crores and total AuM is Rs.26 crores including bonds, deposits etc. Business is growing well only because investors are comfortable with my approach of first educating them, then making financial plans for them and only then getting into transaction execution, as per plan. More than my AuM growth, what gives me personal satisfaction is that I have helped 220 families chart out their plan to achieve financial freedom, and am working with them to help them realize these goals. My clients are teachers, agriculturists, businessmen, doctors - it's a varied set of people from different walks of life. But, all of them, like me, can benefit from sound financial planning - and that's why they come to me.

I charge fees from all my clients - in Davangere

I charge fees from all my clients. My first year fee is a lumpsum which ranges from Rs.5,000 to Rs.50,000, depending on client profile, complexity of portfolio etc. From the second year, I charge 1% p.a. of AuM as my fees. This is for my advice. I tell my clients that the value of a planner actually increases from year 2 onwards - as the biggest risk to the plan is improper execution. Especially now, when clients have made some money last year in equity funds, there is an urge to book profits, to move assets around. I reinforce the need to stay disciplined with portfolio rebalancing, the need to stay invested for the long term. I divert attention from how much money was made last year to where they are vis-a-vis their goals. If you don't keep talking to clients and reinforcing the principles time and again, it is very easy to go astray.

I have clearly separated out advice from transaction execution. For transaction execution, I earn commissions from AMCs. Transactions are done only as per plan. In our region of Northern Karnataka, I am perhaps the only practicing financial planner. I am perhaps the only one who charges annual fees for financial planning services. Its not easy - there are questions that come my way, especially since insurance agents have made passbacks a common practice in our market.

Let me give you a recent incident. I made a plan for a school teacher. He referred me to his younger brother, who is an Economics professor in a college in Davangere. The professor's first question to me was which company I was associated with. He has seen a number of insurance agents make pitches to him, and was wary about me. I asked him, "Sir, have you visited a doctor?". When he replied that he has, I asked him, "Did you ask the doctor which company's medicine he is going to prescribe before you discussed your aliment with him?" I made him understand that I am a financial doctor and the medicine comes only after proper diagnosis, not before. Then he asked me about my revenue model. I told him I charge fees. He couldn't understand why I wanted a fee. I asked him, "Sir, do you pay your CA, your lawyer, your doctor a fee?". Yes, he replied, but they are all professionals, he said. "I too am a professional sir, and as a professional financial planner, I seek remuneration for my services". He saw my point of view and became a customer. Its not always easy, but I believe we must first have conviction in the value we are adding in the financial lives of our clients - when we have conviction, we will be able to go and ask a fee for our services.

Keep doing your job honestly - doors will open

I have conducted live interactive education programs on Doordarshan's Kannada channel between May and September 2014. I plan to continue this activity in 2015 as well. I tried some months ago to approach a large medical college in Davangere to conduct a class there. They did not allow me. One day, after one of my regular classes in my office, a gentleman walked up to me, said he was very impressed with my class, and requested me to conduct a similar session in his workplace for 200 colleagues - it was the same medical college that had earlier turned down my request! Keep doing your job honestly, and doors will open - that's what I believe.

Think BIG salutes Ramesh Hegde

For his efforts in upskilling himself and his clients, unmindful of the challenges of operating in a tiny market, the 2014 Think BIG Award for Advisory Excellence (non-metros) was awarded to Ramesh Hegde, Davangere.

Ramesh Hegde (third from left) receives his Think BIG award from Himanshu Vyapak, Reliance MF and Vijay Venkatram, Wealth Forum

Share this article