We had started with a retail advisory model. At that time, the markets were supportive and to drive our growth, we had hired our team from business schools at a high cost. Our advisory team is among the best paid in the industry. In fact, our salary structures are double of most IFAs.
However, after the entry load ban our revenues were hit but we did not want to downsize our team. In fact, we have been able to raise their salaries by restructuring our business model. We started moving from retail to a more upwardly mobile client base. We had 11,000 clients when the entry load went away. We have cut down our client base from 11,000 to 600. There was a cost involved in servicing such a huge retail client base.
However, we didn’t leave our clients high and dry. We told these clients that we would continue to service them but would not facilitate any additional purchases. We set our minimum ticket size of investments at Rs 25 lakh in 2009. We added only two clients in the entire year and lost over 4000 clients. The next year we added 120 clients and lost another 2000 retail clients.
In the last one year we have been able to stabilise our business. We tried to minimise some costs on the operational side. We are able to sustain the cost of our existing clients now.
I faced severe operational challenges in scaling up my business: Gajendra Kothari
The new kid on the block, Gajendra Kothari of Etica Wealth Management says that he faced a lot of operational challenges during the start of his business. To overcome this he has been constantly upgrading his systems to scale up his business.
Since both brother Virendra and I came from financial services industry it was not difficult for us to start a mutual fund advisory firm. However, we faced a lot of operational challenges in the first year of our business. We had to tie up with various AMCs, service providers, and to learn the systems of various service providers.
Our fellow IFAs helped us by sharing ideas and tips. I then enrolled for FinNet software provided by CAMS & Karvy. Today we have automated all our systems.
Since we did not have the bandwidth we only wanted to work with four to five good AMCs. Once we started meeting clients, we found that their existing portfolios had funds with AMCs with whom we were not empanelled. We had two options with us – either redeem and invest in other AMC or switch in a better performing scheme within the same fund house. Thus, slowly we had to empanel with more AMCs. Today we are empanelled with 25 AMCs.
One of the things which I have learned from the start of my new venture two years back is that one should leverage technology in order to scale up business. Even today operational tasks take 70% of my time. I want to detach from operations and concentrate on business development.
