My journey as a stock investor
In 2001, I completed my BBM graduation. That was also the year I began my journey as an investor. I applied for and was allotted 200 shares in Canara Bank's IPO in Dec 2001, which were priced at Rs.35 per share. I got allotment in physical shares. I had no idea about the stock market, no knowledge of demat vs physical. It took 2 months to convert the shares into demat. My broker urged me to sell as the shares were quoting at Rs.65. I took his advice sold, and bought Zee Telefilms on his recommendation. From there began my journey as a stock investor. I kept buying and selling on his recommendations. Sometimes I made 5000 rupees, sometimes 10,000 rupees. One particular investment gave me a huge profit of Rs.150,000.
I had no knowledge of market cycles, I simply assumed that prices will keep going up. The cycle turned, I was caught unawares, I lost the 150,000 that I lost a further 4 lakh rupees. I could not afford such large losses, and had to work at a broker's office for next 4 years to recoup my finances. Between 2006 and 2010, I stopped all stock investing activities and just worked to recover my financial position.
Learn about mutual funds @ Rs. 60 per hour
In 2008, I got married. My quest for a stable earning and sound long term planning began with my marriage. I discussed my situation with 3-4 seniors in my town. One of them told me to become an LIC agent, another advised me to start a business, and a third person told me to invest wisely using something called mutual funds. That was the first time I heard about mutual funds.
In 2008, I made 3 investments: in an insurance policy, in a mutual fund and in a local chit. Next 20 months, I tracked these investments myself. I had no guidance from anybody. For my mutual fund, I started getting quarterly statements which I began to file regularly. Each time I noticed that the value would be different. I called the customer care number mentioned in the statement and asked why this was happening. They guided me to some websites where I could get information on mutual funds. I paid Rs.60 per hour web browsing charges and started browsing these websites to figure out how mutual funds work. I understood the difference between insurance and mutual funds. I immediately stopped my insurance. Educational articles in websites informed me that an ideal financial plan consists of a term plan, a health insurance and SIPs for investments. I decided to implement this, and got a term plan for myself, and of course continued my SIP that I started in 2008.
From MF investor to MF distributor
I was perplexed - if mutual funds are so much better than insurance, why nobody knows about mutual funds but so many people know and invest in insurance? When I asked this question to some people, I understood that commissions in mutual funds are low, while they are high in insurance - so more people prefer to sell insurance.
That's when I decided to become a mutual fund agent. In 2010, I passed the online exam and qualified as a mutual fund distributor.
When I started meeting prospects, I got many questions, and I was not able to answer a lot of them. I told the prospects to give me 2 days and I would get them all their answers. I got in touch with customer care number of mutual funds, asked these questions, got the answers and went back to the prospects with all the answers. Answering all the queries increased my knowledge tremendously. In the first 6 months, I managed to get only Rs.10,000 SIP business. But I was not disheartened, as I was learning fast.
My biggest selling point was my own SIP statement. I showed people how I am investing regularly in a SIP and how it is performing. Still, it was not easy to convince people to invest in mutual funds in my town. For every 20 people I would meet, 3 would show some interest and finally only 1 would actually invest.
So I stepped up my client meetings. Everyday, I made it a point to meet 20-25 people. By doing this, I was on track to add 1 client. My clients are merchants in the town, even auto-rickshaw drivers. I have 100 rupee SIPs from auto drivers which are as important to me as any other SIP.
Daily cash collection service
Merchants in my town make reasonable amount of money, and it is all in cash, because transactions in shops are always in cash. In a month, they easily save 10,000 - 20,000, but it is in cash. To get them to start SIPs, I had to first inculcate a habit of banking these amounts. So, I started a daily cash collection service. I would collect - and I still collect everyday, from these merchants, 500-1000 rupees and give them my signed receipts. I bank these amounts for them every month and hand over their updated pass books to them. From the amount that is now in the bank, I convince them to start SIPs. They start with a small amount, which is fine with me. From time to time, I show them their SIP statements, show how their money is accumulating in SIPs better than in bank deposits, and persuade them to increase their SIPs by 10%, 20%. This strategy works well, and I have been able to gradually increase the monthly SIP amounts from my clients.
Today, I have 350 SIP clients and my SIP book is Rs.750,000 per month. My AuM is Rs.3.5 crore, and is growing steadily as I increase my SIPs. Every day, I visit numerous clients, collect their cash and deposit into the bank. My daily cash collection is around Rs.15,000-20,000. In a month, around Rs.400,000 is the amount which I collect and deposit - which goes into SIPs. Without this cash collection service, I would not have made much headway in building my SIP book.
My day starts at 8 am and ends between 10 pm and 11 pm. Apart from meeting these clients every day for cash collection, I also personally execute all transactions. There are no R&T offices in Holenarsipura and there won't be any for another 10 years - ours is a very small town. I can courier my application forms, but I don't trust that transactions will be executed correctly if I simply courier the documents. I travel t Mysore, which is 90 kms away, each time I need to execute any transactions for my clients. That way, I can ensure that transactions will get executed correctly and immediately.
A proud moment: Milkha Singh and Himanshu Vyapak, Deputy CEO of Reliance MF hand over the 2014 Super Achiever award to Srinivasa, who was one out of only 4 from Karnataka to achieve this recognition
My biggest win - took 6 months of perseverence
My biggest win happened recently, where I got a client to start a Rs.100,000 SIP with me. It took 6 months effort to get this. The client was willing, after I showed him why equity SIPs make good sense. But his auditor had reservations, and the client was naturally hesitant to go ahead when his auditor was saying no. In small towns, auditors have a huge influence on wealthy investors. I took it up as a challenge to convince the auditor. I showed him all the facts and figures, but his lack of awareness made him wary. Also, there was more work involved for him, if his client invested in mutual funds.
Every month, I would go and meet him for only 10 minutes. Each time, I showed him how the market has moved and how equity funds have performed. If markets went up x, equity fund went up x+y. If market went down x, equity fund went down x-y. I showed him every month over a 6 month period, what I mean when I say equity funds outperform equity markets. Then I showed him statistics that KAMFA shared with me, which showed long term performance of various asset classes including equity, debt, bank deposits, gold, post office etc.
I challenged the auditor to calculate for himself how much his client will lose over the next 10 years, if he continued in an FD instead of starting an SIP as I had been recommending. I had to remind him that mutual funds are not like a local unregulated chit - they are not only national, but global products where millions of people across the world have trusted their savings for decades, and have earned handsomely. After seeing my perseverance and my conviction and studying all the information I gave him, he finally said yes and we started my biggest SIP of Rs.100,000 per month.
IAPs in Bangalore - 175 kms away
My town is very small, and to grow, I need to look beyond. My clients, many of whom are merchants, are in their 50s. Their SIPs are normally 5 year SIPs. People in their 50s hesitate to commit to 20 year SIPs. Their children are studying in Mysore and Bangalore. I know I have to tap them, if I want to build a SIP book of 15 and 20 year SIPs. So I approached my clients, took the email ids of their children in Bangalore and started corresponding with them. I have convinced some of them to gather young people for an Investor Education program that I will conduct in Bangalore. Bangalore is 175 kms away, but I am happy to travel there for an IAP, as I see this as a way to break into the young investor population, which is critical for my business growth. My IAP is scheduled for 17th of January and I hope to interact with 70-75 young investors in the IAP.
I have done IAPs in Bangalore in the past as well. On one occasion, I persuaded a client to allow me to do a 15 minute IAP at their child's naming ceremony! I travelled 4 hours each way to Bangalore and back that day, for a 15 minute presentation. I was happy, the people who came were happy. There was value for everybody in that 15 minute slot. That's what matters finally.
My target is to execute 1 IAP each month in Bangalore. I know that in my model, I earn very little in the initial years. On a 1000 rupee SIP, with a 0.5% upfront and a 0.5% trail, I earn less than 100 rupees in year one, while I spend at least 150 rupees. I understand that I start making money only from year 3 of the SIP. But, I am convinced that if I keep up my pace of client acquisition, over the long term, I will build a healthy income for myself, apart from helping clients create long term wealth.
Knowledge and professionalism are key to success
Knowledge and professionalism are what will make us successful in this business. One small way I demonstrate professionalism is to always arrive for any meeting 10 minutes before time. I should wait for my clients - they should never wait for me! Even for all AMC programs, I always arrive early. Usually, the speaker will be there, and not many IFAs. I use the opportunity to learn from the speaker. Whether he is a fund manager or a senior sales person, there is always something to learn. I never try to project I know something - I always project that I am here to learn. Their insights are always valuable. From the time I started understanding mutual funds on my own by browsing websites at Rs. 60 per hour, till today, I treat every day as a learning experience, and every interaction as a learning opportunity.
Srinivasa's quest for knowledge led him to the CFGP certification
I have no targets I have set for myself about AuM growth. I focus only on two things - find ways to keep meeting 20 people every day, and find ways to encourage more and more people to start long term SIPs. That's all.
In my journey so far, my biggest supporters have been my clients and relatives, who have reposed faith in me. I am grateful to all AMCs in Mysore who have always supported me. And finally, KAMFA has been a real guiding light in my efforts to enhance my knowledge and strengthen my business.
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