‘Indians are ready for fee-based advice'

Many financial intermediaries are moving towards a fee-based model. A recent entrant to the industry is Ameriprise Financial, which has a 117-year history in the US. Mr Bimal Gandhi, Chairman of Ameriprise India, spoke to Business Line on the challenges faced by the industry. Excerpts:

Why has Ameriprise launched its services in India, when fee-based service is yet to catch up?

The Indian middle class not only has more disposable income but also displays a high inclination to save, which offered us a fertile ground to tap investors.

The financial advisory market in India is still in a very nascent stage.

Today, there are many options available but the Indian consumer does not have an unbiased planner who can provide comprehensive advice aimed at achieving their specific requirements.

Ameriprise conducted a research with TNS to understand the Indian consumer's current attitudes, expectations, understanding and disposition towards financial planning.

It highlighted a need felt by Indian customers for unbiased and holistic financial planning advice, offered by a single provider, especially in the mass affluent category.

During the launch of our pilot in India, we received a very positive response from our existing clients who have been willing to pay a fee for the quality of advice, professional, comprehensive, long-term, unbiased and transparent financial advice.

You are also selling financial products. How will you convince your investors that you are not selling a product merely for commission?

We have an impeccable track record of offering comprehensive and unbiased financial planning advisory to our customers.

Our approach and processes are very different from the other players operating in the market.

The products are recommended based on the individual needs of the clients according to the plan. Unlike many industry players, we disclose commissions on all products to our clients.

Further we have a dedicated research and product team for the evaluation of each of these products. The team follows stringent and transparent evaluation processes keeping in mind various parameters.

Our plans and product recommendations are drawn up by Certified Financial Planning professionals who are not incentivised on product-specific commissions, further ensuring that all recommendations are made in the client's best interest.

In India, the brokerage on financial products has been cut drastically. How are you are planning to earn higher revenues?

We have a long-term view and commitment towards our business in India. We have a fee-based model wherein we charge a fixed fee for our comprehensive financial planning services. This approach had helped us build a very profitable business in the US where we have managed assets for generations of clients. We continue our philosophy of investing in building a long-term relationship with our clients and are confident that this will lead to a profitable business.

In the US, you have a franchisee model to do business. How do you track their ethics and are you planning to repeat the model in India?

In India, we are not planning a franchisee model at this time.

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