Pravin was working with HSBC Bank as a Vice President -Premier Wealth in 2012 when he started thinking about leaving his job and starting out on his own. He nurtured this thought for around 6 months before taking the plunge, and now it is an eight-year entrepreneurial journey with Degree 212.
To learn the business ecosystem and its intricacies, Pravin had joined ICICI Prudential Life Insurance after completing his MBA, where he worked for 3 and a half years prior to his time with HSBC Bank. Leaving a well-paid job in a different city while having a house and EMIs to pay off meant that Pravin had to face resistance from his family. But it was a straightforward decision for him, as his willingness to continue with the job no longer felt fulfilling and he could feel a significant loss to his engagement in the last few quarters of his job.
explains Pravin, "our primary aim is to offer solutions to the client's long term needs such as the education of their offspring/retirement solutions. This necessitates a continuous working relationship with the investors, and they deserve continuous guidance. It is not a field that suits a person who wishes to work in it for a couple of years before moving on, because that person's agenda will never match that of the investor."
Pravin added that this seems a fault of the system itself, and people working in that field for two or three years were disconnected with the vision of the investor. In relationship and wealth management, the apparent path was very clear since the beginning - climbing up the ranks, one post after another, it was mostly a numbers game in the corporate world. Being forced to answer to the bottom line, it was impossible to implement one's own philosophies, and almost everything hinged upon revenue generation. He wished to break away from this cycle and to build lasting relationships with his clients through service-oriented work rather than pushing some product package.
Starting out on his own was a calculated decision, owing to his background and in-depth knowledge of the field. Pravin had figures on everything - how much money would be required, the extents of the loans that needed to be taken out, the break-even point, and even ensuring cash flow!
It requires attention and investment at each step. With my calculations, I was sure I could survive with all the loans taken for at least a year," Pravin emphasises, adding, "I managed to break even in the second month of starting out on my own."
Till now the second model is more prevalent in India due to investor reluctance on advisory fees and ever-evolving regulations on advisory business. Pravin started off with the distribution model but has started to include an advisory model - though he is of the opinion that advisory fees are conservative in India.
Speaking about his initial investment, Pravin says, "I avoided taking an office for three months after starting off in April 2012. My investment was just one laptop, and I worked with just one colleague who visited customers for documentation and reported to me - and who was happy that his work hours were reduced to three per day. It took us six months to get into a shared office space, and post an increase in the number of colleagues we leased our own office before buying our own office space in 2018."
Sharing his initial experiences, Pravin had noticed that while most potential customers were ready to have conversations about their money initially, they were conservative when it came to actually make a deal. They wished to see how their invested money would perform beforehand. This was mostly due to the fact that they were dealing with a Startup company rather than the bigger players like Banks or Big Brokerage Houses, and building trust was important. It was, however, these customers that he values the most as they gave him a platform to build references and a corpus. He has very high regards for his early investors who reposed trust in him.
As of 2020, Degree 212 is a private limited company solely founded by Pravin, and he has a team of six members. The new Degree 212 office is right next to his residence, which has enabled him to work from that space during the pandemic while his employees worked from their homes.
According to Pravin, being a wealth manager is akin to being a doctor. It is a relationship built upon trust and competence. Investors are sharper than the advisors, and their lack of technical knowledge about the wealth domain is offset by their understanding of their own issues, much like a patient often knows his own body. A good wealth management consultant must be able to view any situation from the investor's perspective and be honest to both the investor and themselves. Trust is a two-way street, and this approach leaves the investor with no option but to trust Pravin.
Pravin was of the observation, after meeting many investors, that most people were looking to build a trustworthy relation so that their money is safely managed. They weren't looking for that extra one to two per cent that is just maximising their profits. Most people who came to him wanted an assurance that their money was in the right trusted hands with transparent dealing and utmost faith in the intent of the wealth manager to serve them, safe hands which could be relied on by the investor as well as his dependants. The name 'Degree 212' was borne out of this observation, Pravin's focus is on that final one step-up that seals the deal. At 211°F, water is hot, but it is only at 212°F that it reaches boiling point. The name is a metaphor, which serves to reassure the client that Pravin's company will be the difference-maker.
Pravin elaborates, "We do not develop our own products, and leave that to other companies. Our focus, at Degree 212, is the handling and management of these products - providing the experience that enables the final push.
More often, I feel that most of my investors understand the broader market dynamics quite well, they are looking for nuances on products or broader outlook to build a reliable and trustworthy relationship where it is easy to reach out to the wealth managers and have intellectual conversations regarding the market and a valuable exchange of ideas, they actually need value-added perspectives rather than products. Even if our point of view opposes theirs, explaining his side of the argument helps build better perspectives. My starting point with any new client is always going to involve discussing my own views and philosophies, and to listen to their perspectives - pitching the product comes at a later stage. This has helped us in creating a good investor base who appreciate these values in their respective wealth managers. At Degree 212 each one of us strongly believes to deal only with investors who understand our philosophies well, we are not in a race to run for business at the expense of our core philosophies and ethical standards. Over time we realised there are enough investors who look for these philosophical and ethical standards, which made us more confident to grow our business with the core of the culture staying intact irrespective of business cycles."
Recalling his corporate job days Pravin feels, it was natural to sideline a self-development process under various position tags during a corporate job, and that did let him get away with shortcomings. He did not feel accountable enough to upgrade his knowledge and skillsets as required since there was always someone a rung above to provide a cover for. After starting out on his own, he realised that he was the last stop for any good or bad that occurred. This meant that he had to start working on himself, in all aspects of life. Over the past eight years, Pravin has got used to keeping an eye for detail, analysing situations and building up a logical narrative to support his observations. He started considering multiple perspectives about situations and has realised the importance of training oneself and encouraging others to do the same.
These changes have also reflected in his approach towards the Degree 212 team - as evidenced by his personally devised training process. One of his employees started as an operation support boy, moved on to be a relationship manager, while another one is now the company's operational head despite having no formal experience on the same. Pravin maintains an overhead watch over the working of Degree 212, letting his team set up the base for the clients and mapping them to him. His team then manages the clients, and the team holds meetings every morning to discuss the market and its trends.
While touching upon challenges of being the chief guard
It can further seep into other relationships, which I avoid by re-evaluating my own perceptions. In a corporate job, people can be aggressive or restrained as per the situation, and I try to bring that insight into Degree 212 - to continue reading the room. One of the biggest mistakes an owner can make is to think that all his employees should put in as many hours and as much effort as themselves, which usually creates an expectation gap."
Pravin feels that the perception of society towards businesses is that they are established to make money. But if one discards that perception and thinks of it in terms of the value it generates, then he believes that the money will come on its own. Of course, one must consider the costs associated with running the business - but the ultimate philosophy or motivation should not be making money. In the formative years, one can doubt their philosophy and vision, even blaming themselves for losing clients who were beyond their philosophy - but given time one can see that there are thousands of people who have a similar thought process. Through self-belief and persistence, one can reach their target audience gradually, and it is the philosophy, not the product, that will keep hold of customers in the long run.
"An example of this kind of philosophy is to think of returns as a value.
I can't always quantify these returns in terms of numbers, but they are a part of value creation even if they don't show up on my client portfolio," reflects Pravin.
Life, according to Pravin, is not for making money. Au contraire, money is meant to make your life. If one devotes their life to making money, there'll be no end to that pursuit. Pravin believes that one's aspirations need to be supported by money, in order to get the life they want, instead of just aspiring for higher returns.
Pravin wants to advise young people who wish to start out on their own that being laid off is not the right motivation to pursue start-up dreams, stating, "You do not have a firm footing if 'crisis' is your launchpad. However, if you have an idea and the conviction that it will perform in your own place, you should start off regardless of the pandemic situation."
He adds that experience is essential, as one must have some credentials to be able to have the chance of showcasing their value or build a relationship based on trust. When he started out, potential clients entertained the ex vice-president at HSBC Bank, not Pravin. It took careful planning and hard work, along with his experience and expertise, to get to where Degree 212 is today.
People cannot be motivated by words, but they can be inspired by actions. A founder needs to deal with themselves, and not others, and focus their effort on their own development. Pravin concludes with his philosophy,