WF : What led you to take up mutual funds distribution in 1998, when it was still an extremely nascent product in India?

Manoj : I was already into distribution and advisory of financial products through Magma Leasing Ltd. While doing so I came across Mutual Funds. Being a qualified CA & CS, understanding the Product profile and its presence in developed world of US and Europe was not very difficult for me. I strongly felt that this product certainly has a future in India but will need lot of fine tuning and adjustments, which I have seen happening in the last 12 years.

WF : Can you please take us through your journey as an investment advisor - from the time you set up your business to now, when you are counted among the leading IFAs in Eastern India?

Manoj : Starting off with Zero capital and matching number of clients, it was extremely difficult at the initial stage more so due to the fact that Morgan Stanley and Master Gain had just happened. Fell, face on in the year 1999 (KP Scam), got attractive job offers from leading fund house during these difficult times, but was reluctant to look back at a job. More so since these offers valued more then double to what I had estimated my worth, and I knew what could be expected from me. My focus and my undemanding families support gave me the strength to refuse these. Of course God hand-held me through out.

Initially since there was no choice had all HNI's, MNI's, Corporates, SME's, Sub Brokers and even a bit of retail. Now focused only on HNI's & SME's. 1st to advise MF to the Institutions like IIBI, Allahabad bank, Uco Bank or to Corporates like Birla's , Bangur's etc. Moved away from this segment since over time the model with these clients shifted from advisory to discounting.

Few things which the success can be attributed to: advantage of early entrant and lack of much competition initially. Focused advisor despite being a CA & CS i.e. not doing this and other financial products like Insurance, Broking, primary market etc along with the regular professional practice. Knowledge based advisory filtered to client's needs. Extremely personalized service had been the USP throughout. Focus on products, rather than pricing had kept me away from selling disasters like NFO's, Close ended funds, PMS's.

I have always been regarded as the leading player in Eastern India but winning the First ever Best performing Individual Financial Advisor (East) for the year 2006 by CNBC TV18 - one of the most desired recognition.

WF : Why did you not opt to hire sales people, expand your team and aspire for a different business model as opposed to the boutique model that you operate?

Manoj : The pace at which the Industry was growing, resulting in more quantitative than qualitative growth and mis-selling by these uninformed and untrained hands who would look at the top of the ladder in no time, was one major scare. These guys would change employers in no time but I will not have the courage to face even the smallest of the investor with a Rs. 5000/- investment. If you want to operate as a Doctor of Finance you actually have to operate on the same model. I am yet to see the most qualified and successful Medical Practitioners Treating or Operating through hired hands. May be since this will never be acceptable to the patient. Another personal weakness / strength of being extremely specific and particular in life had been a major hurdle.

WF : What is your current business mix - client base and client profile, AuM, AuM mix, product mix?

Manoj : Client mix is 60:40 between HNI's and SME's, AUM Mix is 65:35 between Debt and Equity, and Product Mix is 80:20 between MF's and Others ( ICD's , Financing Bill Discounting, PMS, Tax Free & Taxable bonds, Debentures etc.).

WF : How have you responded to the regulation banning entry loads? Have you made any changes to your business model?

Manoj : The response was somewhat lukewarm, knowing that it Is a regulation and there is not much one can do in this country against such regulation unless you are absolutely united and have a platform which has to be followed by a proper information based (analyzing both the aspects) representation. Thus despite being at the receiving end I was not a part of any of the agitations.

No, there are no major changes in the business model post banning entry load. However, the bargaining power with clients have increased to some extent since you do not make the same kind of money you were making earlier through the same client. Thus today the relation is more of a client's need then the advisor's.

WF : How practical is it in your view to charge fees to HNI and MNI clients in Kolkata?

Manoj : In the given situation as of now it is not practical. I have still not started charging despite requests from small quarters even from clients end. Moreover due to unhealthy competition most of the HNI's are well aware of the kind of money the advisors make despite no entry load. I personally feel that particularly with HNI's even today there are reasonable margins with the advisors. Fee model is here to stay and will certainly make inroads but will all be subject to qualitative value addition.

WF : What are ground realities for advisors in Kolkata? Do you see them settling down in the new paradigm? Are they able to cope? What common traits do you see in those who are able to compete in the new environment vs those who have opted out of this business?

Manoj : Those who could not cope up have diverted to ULIP's, Company FD's, even PMS's etc. These are mid size players. The smaller one's or those who were operational in upcountry have shifted focus to Per application incentive or SIP incentive. Form vendors in the disguise of advisors have vanished and will be nonexistent soon. One has to understand and accept that these desperate attempts will only take them further down. Those who will be able to prove their worth by bringing innovative products based on clients needs and do material value addition in advisory and service will remain in business and will able to wither the storms.

WF : What was the genesis of MAWA? Why did it not take off and sustain after such a promising start?

Manoj : When Service Tax was imposed on Mutual Fund commissions, being a professional I could estimate what it means for a petty or even for the larger guys to go to CBCE. I took the initiative and started talking to a few other larger players in Kolkata. We made a sensible proposition ( full collection without any leakage through 36 AMC's vis-à-vis involving a large machinery to collect a part of it from 50000 distributors across India) to the Finance Ministry and got it approved in the very next Finance Bill. Mutual Fund Advisors Welfare Association (MAWA) was formed with a specific agenda of implementing Service Tax deduction at source, though there were other not so important things on the agenda, but once the prime target was achieved there was no seriousness left in it.

WF : Having seen market cycles and mutual fund players come, go, grow, fade away - all over the past 12-13 years, what do you now see as the key factors that influence you when selecting a fund house and a fund to recommend to your clients?

Manoj : Credibility of the House behind the AMC, fund managers team, the age of the fund managers team with one AMC and its consistency of performance, principles and ethics of the fund house, regional representation of the Fund and how efficiently the regional office handles the servicing aspect. Last but not the least is the pricing.

WF : How do you see the business outlook for advisors in the years ahead - what do you see as the main headwinds that they must navigate and the main tailwinds that they must capitalise on?

Manoj : Business outlook is positive in the sense that there will be enough continuous growth though at slower pace. I have seen the industry grow from 20000 to 8.5 lac Crore. There has to be product innovation like FMP's or in the past Income Funds, Sectoral Funds, Liquid Plus Funds, Capital Protection Funds MIP's etc., each of these products are unique in its own way. Though when said "Mutual Funds" , it looks like one avenue of investment but for a client who is looking for Asset Allocation, Mutual Funds have almost all the choices in it. Apart from the broad classification of Debt and Equity it has Liquid, FMP's, Tax Saving, Pension schemes, ETF's and SIP's which is one of the greatest investment tool for wealth building over long term.

We might see a few more regulatory changes, might see the tax arbitrage of debt funds going away or an investment call of a troubled fund house going bad causing loss of faith of investors or a panic like situation for some rumor. We have witnessed all these in the past and were well handled. So the bridge is to be crossed when it comes.

The positive of the recent Regulatory changes is that uncompetitive competition has reduced and will soon disappear. The mushroom growth of so called advisors has halted and only the serious and competitive ones are into business. My biggest strength and opportunity lies in others weakness. Why, I have had, though a handful of (maximum of 50 - 60 ) clients but dedicated ones. It is only because they did not have enough reasons to point fingers at us during difficult times. Apart from the usual turbulences and thick & thin of the industry in the past 12 years I have been able to retain clients even through KP scam, 9/11, 2004 election meltdown.

WF : What is your view on fund platforms? What would make you want to consider a platform?

Manoj : I strongly feel that a Fund Platform is a must to have proper representation, but at the same time it should be capable enough to weigh and consider all aspects rather then act like the representative of a particular sector of the industry and the other side remains totally ignored. We do not need a platform which truly is an extended arm of the mighty regulatory body. You can't think of a rational body without a proper representation of advisors / distributors in it. A few aspects which immediately needs the attention are:

• Threshold limit to be applicable to MF distributors for deduction of Service Tax. Remember when the law was changed to impact ST deduction at source, there was no threshold limit but subsequently when the same was introduced we were totally ignored. Today even an advisor earning Rs. 1000 monthly is liable to Service Tax.

• AIR for investments in excess of Rs. 200000/-, is causing a havoc of IT scrutiny. IT department has to understand that a gross Inv. Of Rs. 1 Crore could be 50 rotations of the same 2 lac in and out of a liquid fund. This has become a big discouragement for individual investors in particular.

• To check AMC's / AMC representatives who are into the malpractice of selling on false commitments with no intention of ever honoring them. Since due to lack of unity from a universe of 85000 ARN's they always have somebody or the other falling pray to their trap.

• To keep a check on miscreant advisors and if required canceling their registration and banning them for ever.

WF : What are your goals for this year?

Manoj : My goal since last 12 years and in the coming years together had always been to retain clients and add clients through existing client reference. You can not have a better sales guy then a satisfied client referring you.

Last but certainly not the least, to pay back to the MF industry which has given me all the fortune that I have today. I sincerely have done so in the past and promise to keep doing the same in whatsoever way I can till the time I am a part of this industry.

WF : As an experienced advisor, what would be your key inputs and advice to fellow advisors in these times of change?

Manoj : Do not wear out by trying to swim across during storm, rather save energy towards efficient utilization at appropriate time. Since nothing is permanent in this world these plethora of changes will either adjust with the systems or die its natural death. Most important, stick to your morals and principless during difficult times, it is this phase when your torque is tested.

               

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