Popular financial influencer Sharan Hegde's firm 1 % Club has secured a SEBI (Securities Exchange Board of India)-registered Investment Advisor (RIA) licence at a time when the regulator has tightened its noose on financial influencers.
The licence allows an individual or firm to operate as an RIA that is legally authorised to provide financial advice to clients on investments in the Indian market, subject to specific regulations set by SEBI.
The company's Personal CFO division is now fully compliant with SEBI’s strict regulatory framework, Hegde said. "The company has become the first finfluencer-led company to secure the SEBI-RIA licence. The journey to obtaining the licence took six to eight months, including collaborations with top compliance and law firms in the country."
Over the last 1-1.5 years, SEBI has been very critical about finfluencers and people have been insisting on finfluencers getting registered, Hegde said. "So, that is what we went ahead and did. Today, we are a team of 45 people, providing financial advice to almost 1,000 clients. We manage Rs 1,000 crore in AUA (assets under advisory) and we have done that in a span of less than a year. We have done this profitably," he added.
Hegde's goal is to keep scaling it. "One day we will be able to have at least 1,000-2,000 people in a role who can provide financial planning and each of them can help around 200-300 clients. Even if we are super successful, we would have still only scratched the surface in terms of India's need."
He pointed out that in India today, there is a dire need for a financial advisor. "Currently, it's only people who have upwards of Rs 2 to 3 crore of savings who have a financial planner. As per SEBI, India needs almost 10 lakh financial planners. But we only have a thousand. So, if you ask any person who is a middle class Indian today, they don't have a financial planner, nor have they even thought of what that is. So, we felt that there is a huge gap in the market to offer this as a service."
Under the Personal CFO division which is a subsidiary in the parent company we will practice what we have been preaching, said co-founder Raghav Gupta.
"Everybody has been very critical of education companies because nobody likes to study. So, we wanted to walk the talk. We don't want to just teach because a lot of people say that anybody can create content and make money. This licence is our social proof to the world that we can actually do it under the laws and compliances which are adopted by SEBI," Hegde said.
Lack of talent
The company will also expand its team.
"There is a lack of talent in the market. This is not a career that most people are even aware of. We are first spreading literacy about this as a career. Then we are having this model like the way IT services companies have. Hire, train, deploy. We look at their certifications. If they are not certified, we get them certified. We pay during that whole process," Gupta said.
There's a lot of cost from our viewpoint, he added.
"We are scaling it month by month. Also, there is not a single RIA that is fully embracing technology. And as a company that has been built on a digital infrastructure, that I think is our second value addition where we want to increase the efficiency," Gupta said.
Hegde hopes that more companies like theirs emerge to fill the gap in supply.
"To give you some context, 1% Club's aim to capture at least 5-10 percent of this need (of financial planners) sounds like a small number but 5-10 percent is like having 50,000 employees managing other people's money (and) will probably take us 20 years to reach. So, what I am trying to say is that the market demand is so big that there are 10,000 1% Club companies needed in order to even fulfill that demand. So, we just hope that we will become that change maker and more companies like us emerge."
Gupta said that one of the biggest insurance providers have approached them to become their RIA partner.
"The problem is talent. The supply of those people is so low that we are not even able to service our existing members," he added.
Hegde said that before hiring they need to improve the customer experience. "The thousand customers that we have right now, I can easily add another thousand in the next three months. But I would not want to do that but do it slowly because we are constantly learning from the customers as to how we can be better. So, it will be a slow and a gradual process. And once we feel like it's perfect, then we will hire people at scale."
New programmes
Hegde and Gupta are also prepping up for new programmes they are launching.
"We are launching three new education programmes. One is around planning your first car. That's a very big market," Gupta said.
The company has also launched its own tax course on how to manage tax planning for 2025.
"Every programme that we launch, we ensure that we bring the best talent. For the tax course, we have onboarded celebrity tax expert CA Nitesh Buddhadev. Tax is something that scares everybody and people feel that if they don't have a CA degree, they won't understand. We want to challenge that status quo. We have launched a six-hour course," Hegde said.
Very soon they will be launching a crypto course as well.
"We feel that this year crypto is going to be back in action. And the government also has formalised the rules and regulations around how crypto will be taxed. And there are a lot of crypto products which are regulated by SEC (Securities and Exchange Commission) right now," he added.
"We have our own stock market course by stock market expert Shashank Udupa. But a lot of people have told us that they want a more hands-on kind of model. We have incubated a new company called the Bombay Trading School where there will be physical, in-person teaching and this is India's first physical stock market institute," Gupta said, talking about their offline programme.
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