A hilarious video hosted by John Oliver in his talk show Last Week Tonight was brought to my attention this month. In this video, Mr. Oliver delivers a supremely funny take on retirement planning and the pitfalls that investors face when choosing innocuous-looking retirement plans. I could never have put it better than Mr. Oliver. I urge you to see this 21 minute video and save yourselves some serious $$$. While extremely nervous of seeming to appear to be blowing my own trumpet, I wish to convey that Aroha Capital has been built upon 3 fundamental building blocks :
The first being 'minimizing conflict of interest'. This is not just an intent. We have implemented this by registering ourselves with SEBI as a 'Registered Investment Adviser' (RIA) who by SEBI definitions, is a fiduciary and by law must keep client interests above our own. To add, I believe we are amongst the handful of FEE ONLY advisers in India. Most have registered themselves as RIAs but carry on distribution activities under separate entities.
The second being 'skin in the game'. The essence of this is that the adviser stands to lose if the investor loses. This is a simple heuristic that we implement practically by invoicing only 25% of the billable advisory fee in a year and retaining 75% of our fee 'at risk' in client accounts. This takes the concept of 'minimizing conflict interest' a step further by ensuring there is no way we can be profitable without our investors generating returns above their chosen benchmarks.
The third pillar is sustainability achieved by creating a process-driven, client-specific Investment Policy Statement that clearly articulates what we are setting out to do for the client – thus keeping the client engaged and building a sustainable, long-term client relationship.
We believe these building blocks come before ANY claim to superior returns. In fact we believe that without these building blocks, superior returns will be very unlikely. On a parting note, if you are keen to learn more about the difference between a Registered Investment Adviser (RIA) and a Distributor/Dealer/Broker/Financial Planner/Wealth Manager/... you will be well advised to go through this detailed note in Investopedia.