Bajaj Capital group, the investment advisory and financial planning company, is one of the largest distributors of financial products in India. Rajiv Deep Bajaj, vice-chairman & managing director of the company, was instrumental in setting up the investment banking business for Bajaj Capital. In an email interview with FE?s Kavitha Venkatraman, Bajaj discusses on various aspects like investment practices, competition and expansion plans. Excerpts:
Insurance policies were being looked at as an investment option in earlier days. Has the outlook changed? What is your take on the current investment practices?
Insurance is bought as a protection-cum-investment vehicle worldwide. It is a disciplined way of investing money for long-term goals. So, for example, if a person has an aspiration that his child gets education, he would invest accordingly to realise his dream. This is the basic human behaviour and hence the outlook on such matters does not change with time. The new trend that is emerging is that today?s young generation mostly has higher liabilities like housing loans and they also maintain an extended lifestyle. Hence, they are now considering pure protection plans.
Has the customers? profile changed over the years?
Generally, people become conscious of investments only after they get family responsibilities. Hence, traditionally, 80% of our investors have been in the age of above 40 years, bulk of which are pre and post retirees. Our clients come from all walks of life, but the predominant category is salaried professionals. Businessmen are habitually overcommitted and invested in their own businesses. Now, between 30% and 40% of our clients are in the age bracket of 25 to 40 years. There is a slow revolution going on out there, people are becoming conscious of their financial independence at a much earlier age. A key driver of this has been the launch of new generation products like open-ended equity funds and unit-linked insurance products (Ulips). The investment pattern of today?s investors is much more diversified. Their portfolios are fairly well-balanced between debt, equity and cash asset classes, with significant interest in asset classes like gold, real estate and structured products. Post 2008, we have seen a conscious effort on part of investors to have a ?well balanced? portfolio after getting over exposed to equities.
What is your current market share? How has it grown over the years?
We manage around 3% of the total investor folios in the country. In a highly-competitive market, we have managed to hold on to our market share over the years. Also, with our expansion plans in place, we are confident that going forward, we would be able to improve our market share. At present, Bajaj Capital has over 200 outlets spread across 100 cities in India. We are actively seeking to expand our presence in tier-II and -III cities and would be expanding our distribution reach primarily through investment and insurance centers, resident representatives, stock broking dealing offices and exclusive wealth cafe?s for discerning high net worth individual (HNI) investors to discuss investments over a cup of coffee.
What is your take on the competition in the market? Would you look at inorganic growth?
Bajaj Capital is an ?open architecture? independent financial planning company. While in a traditional distribution sense, any bank or distribution house selling third-party financial products may be termed as competition for us, but since our business model is unique and is based on financial planning process, we have been able to carve a unique niche for ourselves in the eyes of our investors. Right now all our offices are company-owned and operated. In future, we may consider the franchise route. In that sense, it could be termed as ?inorganic? growth.
How has the present Irda-Sebi tussle impacted the investment climate?
With so much media attention on the issue, it would not be out of place to say that investors are a little confused and waiting anxiously for the outcome. As a financial planning company, our mandate is to ensure that our investors? money is managed well. Both Sebi and Irda are very astute regulators and hence whosoever regulates Ulips, we have no doubt that the interest of our investors will be protected.