Interview of the month

Interview of the month

Mr Kaeley has had probably one of the most distinguished careers in the Financial Services Industry.

You can know all about him in the section after the interview.

I would urge you to read about his several accomplishments including the fact that he was one of those who started the SIP culture in India.

Currently he acts as a mentor to – Ortium Financial Services Pvt. Ltd. (OFS).

OFS is engaged in the business of Mutual Fund Distribution and specialises in the area of Retirement Planning

In this very insightful interview  Mr Kaeley has laid out both the challenges and the opportunities that lie ahead of the distribution business.

Please read along and discover a wealth of insights and way forward recommends.

1) What according to you the future looks like for a) The Indian Economy b)| The investment opportunity? C) Role of the Financial Advisor

I am very bullish on the Indian economy. India is a young country with half its population below 25 years of age. The coming decades will build on the aspirations of these young people that will both propel India’s growth as well as transform India from a developing economy to a developed one.

As per capita income grows in India, Indian households will have to save more to sustain their lifestyles. This will give a tremendous impetus to the financial services Industry. I also believe that the proportion of savings that are allocated to financial assets will also grow. Further these savings will find its way into the capital markets.

This is great news for Distributors and Advisors. The coming decades will see an explosion in opportunity due to the three trends that I have described above – Higher Income, Higher savings into financial assets and increased allocation to the capital markets.

2) What is your view on concept of Diversification, Asset Allocation and financial planning?

The simple answer to this question is that you are unlikely to succeed in investing if you do not follow all the three concepts mentioned above diligently. You must have a clear goal and an investment plan in place. Your investment plan should allocate across debt and equity and hence asset allocation is vital. Within each asset class, you must build a diversified portfolio. Anyone who follows these principles is more likely to succeed. I would recommend that every single investor should follow this approach without any compromise at any stage.

3) The TER cuts are discouraging IFAs to continue in this business How according to you IFAs can prosper in such challenging circumstance?

The TER cuts are a real issue for IFAs at this stage. The impact is on account of two factors (i) There is no upfront fees and specially when it comes to SIPs, it has hit IFAs the hardest and (2) There is a drop in earnings since old assets  got re-priced to reflect the change in TER.            (3)We have also seen a drop in mid and small cap indices and this leads to a further reduction of income for the IFAs. It is unfortunate that all these three factors have come within a very short span of time. Even if we were to argue that distributors were expecting such changes, the reality is that it is very challenging when one is passing through such a phase.

I do not think I can suggest any easy way out for IFAs. First, IFAs must be convinced that the size of the opportunity is large and that the business is sustainable at these margins. With drop in margins, if IFAs are not thinking of building scale then it is unlikely they will sustain in this business. There is a need to re-double the efforts to build scale. You should be in business only if you believe that you will reach an AUM of Rs 100 Cr in the next 5 to 7 years. Second broaden your product range – IFAs must evaluate adding products like insurance to their offerings as this will help build cash flows. Insurance penetration in India is very low and Term Plans are a great product to complement mutual funds Third, leverage technology as much as possible. This can help IFAs reduce the cost of acquisition and servicing over time.

4) What made you to encourage your son to choose this line of business in such challenging times?

At the outset, I must share that the decision to take up this business was entirely his own. He did a lot of research on Retirement during his post-graduation and he used to work with Axis Mutual Fund as part of their sales team in Mumbai. The customers today are tech savvy and demand professional services. Hence anyone who is willing to put in the hard work and work as a true professional can build a great career either as a Mutual Fund Distributor or as an advisor.

5)  How would you describe your own journey in the investment industry?

I started my career in financial services in 1988. The financial services was at a very nascent stage and many of the institutions that exist today did not exist at that point in time. I would say that the initial stages is all about laying the right foundation and that is what has happened over the last few years. I believe that the real growth is ahead of us and the best is yet to come!

6)  You have started a fantastic blog, what made you start it and how would it help in growing your business?

I am very fascinated by the way technology is evolving. I believe that the internet is a super conductor and any good stuff has the potential of reaching millions of people in very little time. I want to share with everyone my insights on investing and benefit from all the experience that I have gained. I have not thought through the business angle seriously but I believe a Blog can help people understand the thinking and mindset of the person writing it. It is only when they believe that it is useful to them that you have a chance of building your business around it. Over time, this question will get answered and if the response is positive, I can think of ways to build a business around it.

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Mr. Suraj Kaeley has over 25 years of experience in the Indian financial services sector. He has experience across a wide spectrum of financial services in India having worked in Asset Management, Life Insurance, Equity Broking, Mortgages and distribution services.His last assignment was with UTI Asset Management Private Limited as Group President – Sales & Marketing. He was with UTI Mutual Fund till January 2019.Prior to joining UTI, he was the Chief Executive at L&T Access Distribution Services Ltd., a wholly owned subsidiary of L&T Finance Holdings Ltd.Suraj has held leadership positions at FIL Fund Management Private Limited (the Indian arm of Fidelity International), MetLife India Insurance Company Limited and Templeton Asset Management (India) Ltd.He is well known for his expertise in Sales & Marketing. He has contributed immensely to the development of the Indian Mutual Fund industry having worked relentless to popularise the concept of investing in mutual funds through Systematic Investment Plans (SIP).Suraj is a graduate in Science and a post-graduate in management studies. He is also a Certified Financial Planner. He was a part of the committee set up by SEBI to curb misselling in India.

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