Approach - Avinash Luthria, Hourly-Fee Financial Planner & SEBI RIA

5-hour Customized Process. Not the 2-hour Robo++ Process

The 2-hour Robo++ Process is the prevalent model in India
- The 2-hour Robo++ Process (with new clients) provides almost the same plan to all clients, just like a Robo-Adviser does. This requires less than 1 hour of effort. Since the Robo++ plan is almost the same for all clients, often the RIA delegates the preparation of the plan to a junior employee or automates the preparation of the plan
- Additionally the Robo++ Process provides the client with around 1 hour of interaction with the (primary) RIA to clarify some aspects which are unclear
- The Robo++ Process typically requires the RIA to put in a total of 2 hours of effort with new clients
I follow an 5 hour Customized Process with each client
- The Customized Process involves 2.25 hours of discussion and 2.75 hours of back-end work to go into sufficient detail with each client:
  - To identify at least one important issue that the client had not realized (e.g. that the client was taking too much investment risk) or address at least one critical question that the client has in mind (e.g. should the client retire now or later)
  - To explain the recommendation and reasoning in detail so that the client understands it and is hopefully convinced by it
  - To educate the client about critical aspects of financial planning and investing e.g. how do you calculate how much you have to save for retirement; asset allocation between equity / real estate vs. safe assets
- I co-created the Customized Process in India along with one other Hourly-Fee RIA
  - The 5hour Customized Process is similar to the approach of best Hourly-Fee RIA in the US, where financial planning is far more evolved
  - Note: This earlier used to be an engagement with even more hours of engagement. However, as explained on the Fees page, SEBI regulations indirectly limit the number of hours of effort in the engagement. Hence to make the engagement fit within the number of hours of effort that is allowed by regulations, I have recorded some generic aspects of the engagement as audio presentations. Clients watch those audio presentations before the call so that the client and I can focus on client specific aspects during the calls
- The Customized Process in India typically requires the RIA to put in 6+ hours of effort (including discussions and back-end work) with new clients
  - The second half of this article provides an illustration of one part of the Customized Process in one particular situation
  - And this article in MoneyControl provides a bigger-picture illustration of the Customized Process
  - My process, with new clients, involves 3 hours of discussion (3 calls, each of 45 minutes, spread over 1- 2 months). Clients have to put in an additional 4 hours of effort apart from the discussions. Hence if it is not possible for you to dedicate that much of time, then this approach is not a good fit for you

Risk-averse Approach

My approach is risk-averse and conservative, and focuses on simplicity, minimizing costs and minimizing mistakes (described further in this article in Mint- The Ten Commandments of Personal Finance and in this audio presentation)
Some examples of this approach are provided below:
- Risk-averse:
  - All of us tend to overestimate our ability to stay calm during a significant stock market crash. Ironically, the primary way to mitigate this is to accept that it will be difficult to stay calm in such a scenario (relevant article in Mint). As a result, one should limit one’s equity allocation to twice the amount that one is willing to permanently lose (relevant article in Mint)
  - First Hourly-Fee / Fixed-Fee RIA in India to explain and use the risk-averse insight that equity is risky even in the long term
- Conservative:
  - The average investment returns on one's overall net worth over one's lifetime, is much lower than most people estimate. Because of this, saving an appropriate amount each month (and year) becomes as important as investing (relevant article in Mint)
  - First Hourly-Fee / Fixed-Fee RIA in India (and probably in the world) to explain and use the conservative Zero-Real-Returns approach to financial planning
- Simplicity:
  - The entire core of the retirement planning calculation should be simple enough to do on the back of an envelope (relevant article in Mint)
  - First Hourly-Fee / Fixed-Fee RIA in India to use this simple approach
- Minimizing costs:
  - On the whole, Indian active mutual funds do not beat the index (relevant article in Business Standard which will download as a PDF file and another article which explains the data). Hence, I recommend only low-cost index fund and index-like funds and this is similar to Warren Buffett’s advice. Most of these funds charge less than 0.20% p.a. (relevant article)
  - Only Hourly-Fee / Fixed-Fee RIA in India to recommend only Index Funds
- Minimizing mistakes:
  - Not sufficiently diversifying one’s portfolio (between safe investments vs risky investments such as equity & real estate) is the most common mistake that one should avoid (relevant articles in MoneyControl and Business Standard)
  - Joint-First Hourly-Fee / Fixed-Fee RIA in India to use the (8+ hour) Customized Process that goes into sufficient details to identify such mistakes
    - First RIAs in India to transparently disclose the targeted number of hours of effort per client on my website i.e. to use an hourly-fee approach

Decisions

I advise clients and occasionally, where critical, I try and convince a client
Clients take the final decision about whether or not to partially / completely accept each recommendation

Implementation

Clients are responsible for implementing the Financial Plan. Typically, this is done online
I try to guide the client through the implementation of the Financial Plan, but I do not have any direct or indirect control over the client's investments

Logistics of the Process

Clients interact only with me and I do all the client work
- There are (deliberately) no team members
- So life-or-death recommendations about the client's future are not being made by a 23 year-old (unlike some RIA firms that have a large team of junior employees that provide such recommendations to clients)
With existing clients and potential clients:
- The primary mode of discussion is over pre-scheduled audio-calls
- I do not do face-to-face meetings / video-calls with anyone
- I do not do calls when the (potential) client is in a noisy environment and / or traveling by road
- If there is a single person on the call from the client's side, then the client should use a headset (i.e. not speakerphone) during the call
With existing clients:
- Pre-scheduled audio-calls are typically, from Monday to Saturday, 9am to 1pm and 2pm to 7pm
- The only mode for formal investment advice is over email i.e. all other modes of discussion are only informal discussions (Note: This is due to SEBI regulations)
- The client should be able to access a laptop / computer during every audio call
With potential clients:
- Pre-scheduled audio-call are typically, from Monday to Friday, 9am to 1pm and 2pm to 7pm
- I do not provide any investment advice during this introductory audio call

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