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Early setback at tender age of 13
In 2002, when I was only 13 years old, my father died. We were not financially well off - my father worked with Sahara's para banking business, doing daily collections in Kashipur. I was in 9th standard then. My sister and I took on the task of continuing my father's work in order to maintain some income and enable us to complete our high school education. In 2005, I completed my 10+2 and was introduced by a well wisher to life insurance agency, which I commenced with SBI Life. I gave up aspirations of higher studies in order to bring in income into the family. It was a big struggle for me - I was young, inexperienced and people would keep postponing my meeting requests and drag their feet on buying. That was my first taste of objections and objection handling. I developed a keen interest in reading and I read a lot about selling strategies, objection handling and self motivation. That kept me going and I started becoming good at the job of selling. For next 3 consecutive years - 2006, 2007 and 2008, I became the youngest advisor in SBI Life to qualify for MDRT.
Sold aggressively - but inadvertently mis-sold
Unfortunately, though I had developed selling skills, I still lacked the maturity to independently research and understand some of the products that I was asked to sell. To be honest, I was misled about certain product features and I faithfully communicated what I was told to my clients, without doing an independent due diligence. I trusted and believed what I was told to sell. I was still in my teens and not really worldly wise yet. I ended up selling badly designed, expensive ULIPs and single premium products and my clients paid the price for my ignorance in the market crash that happened in 2008. My business collapsed, income dried up and I lost the trust of my first set of customers. Till date, I haven't been able to go back to them.
Guided well into mutual fund distribution
In 2009, my sister and I started our mutual fund distribution business, through NJ India. We were called to Surat, where we were explained how to build an MF distribution business. They really motivated us about the future of this business and showed us the right way to build it. My sister got married in 2010, leaving me to run the business independently. I was 21, and our AuM then was around Rs.10 lakhs. Jan 2011 was when I formally took charge of our business, and resolved to make it BIG.
First decision: don't stay within comfort zone
One of the first decisions I took was a resolution to expand my horizons beyond Kashipur. There were two main reasons - Kashipur is a small town with a population of hardly 120,000 people. If I was dreaming BIG, I needed to be looking at a much bigger territory. Second factor was a realization that if I sit in Kashipur, I will quickly slip into my comfort zone. I would always find reasons to postpone going to a client - I can always do that tomorrow. But, if I were to move around in different towns around Kashipur, I would be putting pressure on myself to make the most of each day. If I travelled to Rudrapur, I know I am there for a day, so I need to maximize my opportunities during the day. And if my travelling keeps me away from Kashipur for several days, I am automatically putting pressure on myself to give it my best shot on the days I am in Kashipur. This approach made me maximize every single day, rather than slipping into a cushy unproductive pattern.
Growth spurt aided by strong guidance
The period 2011-2013 was very tough. Commissions were low, investor interest in mutual funds was very low, markets were unsupportive. By March 2013, with all my efforts, I was able to take my MF AuM upto Rs. 2.7 crores. Around that time, Himanshu Arora of Reliance MF, who was then a cluster head in our region, took me under his wings and guided me on how to scale up my business - for which I will always remain grateful to him. We did numerous IAPs in Kashipur and surrounding towns and he accompanied me on several HNI calls. With his support and guidance, I was able to scale up my AuM by March 2015 to Rs. 11 crores. I was by this time, active in several towns around Kashipur - including Bajpur (26 kms from Kashipur), Rudrapur (60 kms), Pantnagar (75 kms), Haldwani (90 kms), Rampur (70 kms) and Almora (130 kms).
Cold calling and education: only two mantras for success in new markets
When I go to any town, my strategy is simple: cold calling. The markets that I target have very little or no awareness of mutual funds. Most people however have suffered from insurance mis-selling. I know I have a good product, I know my product will benefit these prospects. So, why should I be shy and hesitate about cold calling? I approach businessmen, doctors and other prominent people in the town. I talk to them about mutual funds. I help dispel their misconceptions - which are mainly around risk. People don't understand what is a liquid fund and assume even that is risky. I walk them through asset classes, risk, return profiles of each asset class, benefits of SIPs, benefits of long term investing, benefits of taxation on mutual funds etc. People are apprehensive of debt funds since there is no guaranteed return - I explain to them how returns come through in debt funds, I show them YTM data from fact sheets, I explain what is duration and its role and how returns actually get realised in debt funds. I ask them to try out liquid funds, take out the money in a few days and see for themselves how it works. Slowly, confidence starts building, and then I recommend SIPs.
Two ways to look at "expiry date"
From March 2015 to March 2016, my AuM doubled from Rs.11 crs to Rs.22 crs. I work 18 hours a day, including Sundays. I serve around 400 client families and have built a SIP book of over 1300 live SIPs with a monthly input value of Rs.50 lakhs. During this time, various people told me about how the IFA business is going to collapse due to commission caps, commission disclosure, direct plans and so on. People told me not to expect to be in business for more than 3 years, and to actively start looking out for other options.
My response was simple. On 1st April 2016, I decided to move into top gear on AuM growth. You can worry for next 3 years about how business will collapse or you can decide to make the most of these 3 years and then review whether business has indeed collapsed or not. I decided to do the latter. I set myself a target of reaching Rs.100 cr AuM by 31st March 2017, as my first target, after which I would set my target for March 2019 - which is when the 3 year time frame would end. When you set a mental "expiry date", you start thinking very differently on how to maximise your opportunities before the "expiry date".
Change in business strategy
I also realised that if I am playing an ODI match, I should change my strategy and go for big hits in the initial overs and then build the innings once I've got more runs on the board. Until March 2016, my focus was SIPs. I decided to shift gear towards semi-institutional, SME and PF segments. Just like I was used to cold calling on individuals all these years, I started cold calling on PF trusts, SME businesses, corporates, hospitals, etc. I went through the same struggle of building their comfort in mutual funds. In the last 10 months of this focused effort, I have been able to break through into several such accounts and my AuM has increased sharply from Rs.22 crores to Rs.98 crores. I have now raised my March 2017 target to Rs. 150 crores AuM.
For me, the biggest sense of satisfaction is not the big jump in AuM, but the fact that for every single one of these semi-institutional and SME clients, I was the one who did their MF KYC and brought them into mutual funds. They are all first time investors in mutual funds. Some people tell me this is a short-sighted move since these clients will eventually go direct. My thinking is very different. Yes, corporate clients are not known to be loyal - they are deal conscious. But the idea is to leverage these new relationships that I am building, to build my long term business. Every corporate I acquire as a client, I create goodwill by introducing them to a good product. That gives me a foot-in-door to pitch for their employees' SIPs. Maybe down the line some may go direct - but at least I do get well compensated until then for the effort of introducing them to mutual funds, and I build strong relationships which helps me strengthen my core retail business.
March 2019 target: Rs. 2 cr SIP book
I have set myself a target of reaching a SIP book of Rs. 2 crores by March 2019. I know that the jump from 50 lakhs to 2 crores can happen only if I adopt a different strategy. This strategy of building relationships with corporates, will I am sure, help me reach out to many more retail investors than I would ever have achieved with my cold calling efforts. This is what I am counting on to get my SIP book to grow 4X in the next 2 years. I believe the potential for creating a market for mutual funds among large investors like corporates, SMEs, trusts, PFs etc in Uttarakhand is huge. I can see that with continued focus on this segment over the next 2 years in my region, I can probably aspire to grow my AuM from 100 crs to 300 crs. This focus brings in good money for me, which helps me create my own "financial freedom" fund. Creating a financial freedom fund in the next 3 years will put me in a good position to take on any challenges that may come my way.
I am already making my plans on other strategies to reach my goal of Rs. 2 cr SIP book, beyond the corporate relationships that I am now acquiring. To my mind, the 7th Pay Commission payouts will be a huge opportunity to tap into, for creating or enhancing SIPs. I am already putting my action plan together on this front, in a systematic manner.
Seize the opportunity rather than letting worries seize you
We will keep hearing about new regulatory challenges all the time. Now, the latest we hear is that SEBI may not insist after all on going ahead with its RIA proposal - which is welcome news. In any case, my thoughts are very clear - seize the moment, build your business and along with it build your personal financial freedom fund. God willing, we will continue selling mutual funds for many years and decades - but if for some reason we have to change course at some time, lets understand that with our client relationships and selling skills, we will always have enough entrepreneurial opportunities. With that at the back of the mind, just go ahead and make the most of this wonderful opportunity of reaching a great product called mutual funds to many more investors across the country.
Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.
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