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I started my career in the financial advisory space in 2001 as a sales executive at Integrated Enterprises in Vizag. Initially, I was responsible for demat accounts and then was transferred to the investments section, which handled fixed deposits, bonds etc. In 2002, I moved to Bajaj Capital and worked there for 2 years, selling FDs, bonds and mutual funds. In 2004, I moved to Karvy, where I spent over 8 years, starting as an executive and rising to regional manager position. I was instrumental in building the AuM from just 5 crores to over 120 crores by the time I left. My market extended beyond Vizag to all neighbouring coastal areas in Andhra Pradesh. From Karvy, I moved to Destimoney for 18 months and then was called by IndusInd Bank to become their Investment Counsellor in Vizag.
A rude shock in my first 3 months
In Dec 2014, I decided to branch out on my own. I took up an ARN and started my IFA practice from home. It is only in Jan 2016 that I set up an office - until then, I was operating from home, to keep costs low. I started out with a lot of enthusiasm and confidence. I had a lot of experience in this business, I was managing many clients at Karvy and IndusInd, and a lot of them had expressed support for my decision to go independent, when I was planning the move. But, when I went back to these clients after setting up my independent practice, I was very disappointed to see only few of them willing to move. I tried hard for the first 3 months, and focused almost all my efforts on trying to persuade my old clients to my new practice. It was a very disheartening time for me. I didn't get the support I was banking on to get my practice off to a smooth start. Whether it was the fact that I was no longer associated with a big brand or the fact that I did not have a proper office set up to show them, I don't exactly know why they hesitated. But, I certainly found myself in a position I had not planned for.
I did it once. I will do it again
One night, as I was reflecting on the disappointing turn of events over the earlier 3 months, I made a decision. I said to myself : I had made so many savers into investors over the years. I can do that again. I found clients earlier. I will find new clients once again. And I resolved to myself that I will build a business for myself that will be equal to the one I was instrumental in building at Karvy - a Rs. 100 crore+ AuM business.
People in the industry laughed at my ambition of a Rs.100 crore AuM. No IFA in Vizag had crossed Rs. 30 crores AuM, despite being in business for several years. But, I had set my goal, irrespective of my initial struggle as an IFA.
Target segment: retired and retiring salaried people
From the next day, I stopped chasing my old clients. I considered the market and my options. I decided to focus on retired and retiring salaried people as my core target client base. This is the segment that has the maximum need for inflation fighting investment solutions, and is least exposed to them, due to misplaced risk perceptions. I decided that this is the segment I can make the maximum difference in, and through this value add, build my business from scratch - one client at a time, one referral at a time.
Only concept selling
My policy is to never sell a product on past performance. My aim is to get investors comfortable with the concept of equity and its utility in their financial lives. Once they are convinced about equity, then I look at intelligent solutions that give exposure to equity at the same time helping protect some downside through disciplined asset allocation.
A typical conversation will start with me asking a prospect which toothpaste he uses. Most common answer is Colgate. Then I ask him which brand of glue/gum he is most familiar with. Most common answer is Fevicol. In such a way, I take a few examples of brands that he is very familiar with, brands he uses in his daily life. Then I pull out stock price charts of Colgate, Pidilite and such companies whose products he uses, and I show them how much wealth they have created in the last 10 years, versus Sensex and versus fixed deposits. When looking at share price charts of "familiar" names, the risk perception about equity is much less in the investor's eyes. He sees clearly the wisdom in participating in the wealth creation journey of these business, and not just consume their products.
This strategy helps break the fear around equity. It is only concept selling. Once they are comfortable with this, I then introduce them to model based auto rebalancing balanced funds. I prefer funds which have a consistent dividend track record. A steady stream of dividends, with the benefit of auto-rebalancing in a disciplined manner, is an ideal combination for retiring as well as retired individuals. For retired individuals, I take them through step by step from liquid funds as a substitute to savings accounts, to accrual funds as a substitute to fixed deposits and then equity oriented funds for wealth creation as opposed to property and gold.
My big break
During these efforts, in February 2015, I got a referral from one client. I spoke to the prospect and he told me that he wanted to invest Rs. 2 lakhs. I readily agreed to meet him and explain alternatives, despite his cautioning me not to expect a lot of investible surpluses to advice on. I reached his home at the appointed time of 5 pm on the dot. I left at 11 pm. I was carrying with me, not a Rs. 2 lakh cheque, but several cheques totalling to Rs.2.2 crores! He wanted to invest Rs. 2 lakhs into equity. I didn't get straight into a product pitch on equity funds. I probed for his understanding and awareness of mutual funds. He had very little knowledge of funds. So I started from the basics - going up from liquid funds to accrual funds to balanced funds and finally equity funds. He was so satisfied with the interactions and the answers to his queries that he pulled out his full portfolio, which had several fixed deposits and other investments. Then we went about restructuring all elements of the portfolio that were inefficient, and to my surprise and joy, he straight away accepted the suggestions and handed over cheques worth Rs.2.2 crores to implement all the agreed plans.
I really didn't look back from that day onwards. This was a huge booster dose for my confidence. I stepped up my efforts in tapping this segment - retired and retiring salaried people. Clients started coming, and with them referrals started growing.
Two main product categories
I focus on two products for retired clients: accrual funds and model based auto rebalancing balanced funds. For a client who has developed conviction in equity based on our concept discussions, I recommend upto 65% of their portfolio in such balanced funds and the balance 35% in accrual funds. That gives them a 40% + equity exposure, which is critically needed to fight inflation, but at the same time, has built in volatility control measures to give clients a better investing experience. As I mentioned, regular dividends from balanced funds goes a long way, in addition to volatility control, in providing a good investing experience to retired investors.
No 1 IFA in Vizag
Today, within 2 years of setting up my IFA practice, I am now serving around 300 clients, with around 900 folios. My AuM is Rs.39 crores, of which Rs. 22 crores is in equity and balanced funds, Rs. 9 crores in long term debt funds and Rs. 8 crores in liquid funds. Only Rs.1.5 crores is institutional money, the rest is from individual clients.
My AuM makes me today the biggest IFA in Vizag. But, I still have a long way to go to reach my goal of Rs. 100 crore AuM. Now maybe fewer people laugh at my goal, but many still think its too tall a target in Vizag. My thinking is simple. The population of Vizag district is 33 lakh people. We know that even a rickshaw puller can invest at least Rs.500 in an ELSS fund. We also know that this will be a great investment for him. If I can reach out to more and more people in my district, why can't I progress towards a Rs.100 crore target? Why can't I dream of 1 lakh folios even if I have only 900 folios now? President APJ Abdul Kalam said, "It is a crime to dream small". Swami Vivekananda said, "Take up one idea. Make that one idea your life; dream of it; think of it; live on that idea.". My one idea is to reach Rs.100 crore AuM in the next 3 years.
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