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Four aspects set Samir apart from many others:
The clarity with which he articulates and delivers his value proposition to HNI clients, The foresight with which he has created a scalable tech driven model with minimal back office to support his growing business, The broad-mindedness which enables him to create winning teams across multiple cities, and The wisdom with which he sees the future and prepares for it today
Samir was recognised in 2016 as one of the Rising Stars of the IFA fraternity in the Emerging Advisor Awards which are jointly given by SBI MF and Wealth Forum (Click here to know more). He has not only vindicated this recognition, but is rapidly moving from being a Rising Star to one of the leaders of the IFA fraternity.
Samir Vora receiving the SBI MF - WF Emerging Advisor Award from Dinesh Khara, SBI
Here's Samir's BIG story, in his own words:
Value proposition
Our focus is on the HNI segment, and our proposition to HNIs is to optimize their financial portfolios to ensure delivery against expectations. Most of the HNIs we target have experienced the services of banks and wealth managers. There is always some level of discomfort because some investment was made to accommodate the RM, or some investment was made despite the client not being 100% convinced. The nature of the wealth business model is such that you land up creating sub-optimal portfolios for your clients.
We run a research intensive advisory operation - from day 1, we invested in the Morningstar Advisor Platform which enables us to analyse client portfolios rigourously across equity and debt funds. We also maintain and update quarterly our own database of credit ratings of all debt papers and map them to debt funds to understand portfolio quality.
But, all of this comes into play much later. In the initial couple of meetings, we listen more, we talk less. We don't talk about any product at all. We understand the client's objectives from the portfolio and then offer to analyse to what extent the portfolio is aligned with their objectives. Most HNIs put a high premium on safety and liquidity. Most HNIs these days have very reasonable return expectations from their portfolios. In our experience, the days of 15-20% expectations are history - clients are happy with 10-12% post tax return on their portfolios.
When we analyse their portfolios, we map the portfolios against their expectations on safety, liquidity and returns expectations. We analyse their equity fund holdings and highlight instances where there are significant overlaps in underlying stocks of their equity funds - which gives them a much better insight into how concentrated their portfolios actually are compared to what they thought based on just reading a number of equity fund names in their portfolios. We analyse the underlying credit quality of their debt fund holdings and map that against their safety expectations. When they have direct equity holdings, we put together a returns summary of their stocks and map that against market benchmarks and against well managed PMS schemes.
What we establish in 3-4 meetings is the gap between their portfolio structure and the ability of these portfolios to deliver to their expectations. These detailed discussions give clients a good insight into how we approach the advisory role, how we focus on understanding individual requirements and structuring portfolios that align truly with their objectives.
We share with them our success stories - actual client testimonials on how we are adding value in their portfolios. This, together with the work we demonstrate on their own portfolios, gives them the confidence to hire us as their advisors.
Prospecting
If you want rapid growth, you cannot rely only on client referrals. You have to supplement this with good old cold calling. We do our homework and choose target markets carefully for our cold calling efforts. So, if there is an upcoming GIDC zone, we target the entrepreneurs of that industrial zone. When we see rapid growth in bank deposits in Naroda and Sanand, we go there to make our cold calls, because there is clear indication of wealth accumulation in these pockets. Initially, our conversion ratio was 50 cold calls to 5 appointments to 1 conversion. Now, its more like 10 cold calls to 5 appointments to 1 conversion. The important thing is when you break into such new markets where you have no presence, these customers start referring you to many people around and you are able to rapidly establish your presence there.
Operating model
From day 1, we opted for a 100% online model with our own web portal and mobile app for our team and all clients. Our portal is connected to BSE Star platform and on an average, 95% of all transactions are done fully online. Less than 5% are on physical form basis. This has meant a very lean back office set up to support our business. We are a 15 member team spread across our branches - of this, 12 are relationship managers, one handles all our marketing, blogs, social media, one takes care of admin and HR and only one person manages the back office.
Team
The 12 of us who manage client relationships have different qualifications and backgrounds - which enables us to pool experiences and get the best from each other. In our team, we have people from wealth background, insurance background, CA, CFA, retail background - it's a diverse mix. We learn from each other - the average age in our firm is 28.
Team Ocean Finvest - Ahmedabad
Team Ocean Finvest - Vadodara
Team Ocean Finvest - Mumbai
My philosophy is that Ocean Finvest should give our team members an opportunity not only to make money but also to grow professionally. Professional growth can happen only when you have an open work culture, where people are given the necessary freedom, but at the same time are committed to learning from each other. We have continuous open discussions on products, markets, compliance, risk, client engagement - all aspects of the business. Each person takes responsibility for one aspect and updates the team on key developments on his/her area of functional expertise.
On the money part, my revenue sharing formula is very simple. When you bring in revenues in excess of 2x your cost, you become eligible for incentives. Revenues above 4x your cost entitle you to 50% of the revenue. Beyond 4x, you become my 50% partner.
I give my team members a platform, an open culture and an attractive revenue model - this enables them to go out and realize their full potential. Some of my team members have worked with me in my previous assignments - we understand each other very well and we support each other well.
Way forward
We have applied for an RIA licence and intend having a hybrid model of distribution and advice in our company. I believe its best to leave it to the client to decide which model they prefer. In my opinion, in the HNI space, AuM will progressively shift from distribution model to RIA model. The way I am building our business is to assume that in 2 years, 30% of AuM will shift to RIA model and in 5 years, we must be able to run a viable model with 100% of AuM in RIA mode.
The other assumption I am making is that the current high product cost and high commission model will not survive in any case over the next 5 years even in the distribution model. In the next 5 years, I believe trail commissions will progressively come down to around 50 bps in equity and 25 bps in debt. Cost structures will come down sharply, with technology aiding more and more rounds of cost cutting on expense ratios. Also, especially with debt funds, as returns keep coming down, expense ratios will come down sharply.
As entrepreneurs, I believe when we build long term business plans, we must factor in the eventuality of topline for our business somewhere between 25bps and 50 bps depending on asset mix and an increasing proportion coming from RIA mode rather than distribution mode - at least in the HNI space. With that in mind, gaining scale rapidly in the coming 3 years is imperative, as scale is what will enable you to successfully migrate your business model into a low margin environment.
Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.
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