|
Learnt from my first stumble
I started my MF distribution business in 2006. In those days, I was not very mature as an advisor, and I went with the tide and recommended lumpsum investments. Times were good for a while for clients and for me, but when the market crashed in 2008, we all took a big dive - clients and my business.
I learnt some hard lessons in that crash. I learnt the value to SIPs, the value to averaging out through good and bad markets, the value of focusing on goals rather than markets, the value of disciplined long term investing. I changed my model to focus mainly on SIPs and since 2009, I have maintained this focus on SIPs - perpetual SIPs linked to life goals.
The first 3 hours are the most important
When I meet a new client, I spend around 3 hours with him in explaining the fundamentals of financial planning. I ask him to narrate how he has been managing his personal finances till now and point out where he is going wrong. Majority of clients have not thought through how they are going to fund their children's education and marriage, and have not really considered life after their own retirement. Many of them fall into the trap of debts to meet expenses that should have been foreseen and planned for earlier itself. I encourage clients to change their spending habits where required, to enable them to start saving prudently. When we finish with our 3 hour session, most clients walk away with a lot of regret about what they have done wrong so far, and determination to set things right from now, using a properly planned approach to investing. I get a lot of satisfaction when my clients come to me later on and say, "Aapne loan kiaadatchudvadiya" - you got me out of the debt habit.
I tell clients to treat SIP just like an EMI - only that this EMI will help build their wealth rather than pay down debts that they have taken. When I ask people which saving or investment gives the most satisfaction, most of them recount how their retiring family members' felt so happy with their PF maturity on retirement. I help them understand that the amount becomes substantial on retirement only because of 2 things - regular contribution every month, and no withdrawal until retirement. Then I help them understand how much more their SIP can generate for them when they retire, if they adopt the same 2 principles - regular investments and no withdrawals. That strikes a chord among many clients and helps them understand the right way to create long term wealth.
Help clients understand market downturns in the right perspective
I also make it a point to tell clients in the beginning that they will surely see periods of negative returns in their SIPs. I help them understand that each negative period is actually enabling them to buy more and therefore to treat each negative period as one that helps bring them to their destination faster. I help them understand the merits of topping up SIPs when markets correct significantly - that each time they top up in a market correction, they are bringing forward their achievement of their goals by a few months. This is very important for clients to understand right in the beginning, as it gets them to buy in dips rather than stop SIPs in dips.
I know that SIPs started in the last 3 years have not yet shown healthy returns. In fact there are SIPs started even before that which are still showing single digit returns. I don't for a moment think that my clients may perhaps not reach their destination. Markets move in cycles. If the current phase is down, it will be followed by an up phase. As long as we have accumulated sufficient units in SIPs in the down phase, we are putting ourselves in a great position to reach our goals in the upswing.
Constant focus on enhancing productivity
In the first couple of years of my SIP focus (2009, 2010), my monthly run rate was around Rs.30,000 p.m. of new SIP input.As I gained more experience, I managed to increase my monthly run rate. Then, by 2012, all my early clients had seen healthy returns on their SIPs. I went back to all of them and got them to top up their SIPs. These clients also started giving me referrals. A steady stream of referrals helped boost my monthly run rate to Rs.50,000 p.m. of new SIP input.
In this financial year, I have moved my efforts one gear higher. I used to conduct 2 IAPs in a year - this year, I have done 4, and plan to maintain this momentum of 1 IAP per quarter. In each IAP, we have 150-200 investors - most of whom are referrals from my clients. We were fortunate to have Mr. BrijeshDalmia as the speaker in our last IAP. These IAPs generate a lot of leads, which then result in a steady stream of business. The other thing I am doing consciously is not to turn away from what some regard as unprofitable business. I recently travelled 40 kms each way to meet a client who gave a Rs.1000 SIP. I am doing this, only because I know from past experience, that I can get 5 more SIPs from the same family in the next 1 year.
This year, my monthly run rate has moved up to Rs.80,000 p.m. of new SIP input. As of now, I have over 2500 live SIPs and my SIP book stands at Rs. 52 lakhs. My total MF AuM is around 25 crores from around 3000 retail clients. It is growing steadily, largely on the back of my growing SIP book.
I don't have any sales team - I have only one person other than me, who is responsible for back office. I believe I can maintain business momentum at the current level, and maybe step it up more. It took me 7 years to reach the 50 lakh SIP book mark. I believe I can get the next 50 lakhs in the next 3 years. I continue to operate largely in a paper environment. I do realise that I will need to adopt paperless transactions to increase my productivity and help me raise my monthly run rate further. I work daily till 11 pm. For my next leg of growth, it has to be done by enhancing productivity rather than working more.
Dealing with regulatory change
I don't worry about regulatory changes, because I cannot influence them. When service tax was levied on us, I focused my attention on how to grow my business by 15%, to compensate for that loss. There was nothing more I could do about it anyway. Right from when I started this business, we have seen so many regulatory changes. I don't spend time worrying about the future, because the only sure outcome about worrying too much about the future is that you are giving up today's opportunities to grow. You can sit paralysed with fear about tomorrow or you can say let me take one step at a time, one day at a time, and make sure that I make the most of today. If I keep my focus on making the most of today, I should be in good shape tomorrow. Now, there is this new circular on commission disclosures. I know there is a lot of discussions around it. I know I have to deal with it, when it comes. But today, I'd rather put my energies in maximising my opportunities of the day. My belief is that as long as I put in a sincere effort to serve my clients, invest their money the way I would invest my own, and help them onto the road of wealth creation, they will value my services. As long as my clients value my services, my business will grow.
Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.
Share this article
|
Think BIG