Valsad-based Umesh Shukla began his career as a mutual fund distributor in 1984-85. Initially operating from a small office, his business grew as he corporatized his advisory practice by floating a private limited firm called Jury Advisory in 2003. Today, Umesh is associated with three companies – Jury Advisory, Citrus Advisors, and I Can Financial Solutions, and has over 50 employees.
Thanks to his consistent effort at building the business, Umesh today serves over 7,000 clients with assets under advisory of Rs. 300 crore in mutual funds. When asked what has worked for him, Umesh says that he has been following three simple strategies to scale up his advisory business:
- Range of products: Umesh says he always very clear that his advisory practice should be able to help clients on all aspects of personal finance. In short, his advisory business had to be a one-stop solution for investors. This is what he did, and today his company offers the full spectrum of financial solutions from insurance, mutual funds, direct equity, to PMS and so on.
- Increase client base: Referral for Umesh was the best way to increase client base. However, to get referrals, advisors need to create a lot of value through their services, he says. This is where organizational setup and financial planning comes into picture. Besides referrals, Umesh has also acquired new clients through over 500 investor awareness programs (IAPs) conducted across clubs, community centers and SMEs.
- Cross selling across products: Umesh believes that mutual funds provide a solution to deal with everything in the world of investments. He says, “Mutual Funds have gold ETFs against physical gold, ELSS against PPF and FMPs against FDs, liquid against savings bank account and so on. All these products have an edge over traditional products in terms of taxation and returns. IFAs should sell these products to increase wallet share.”
While typically many advisors tend to recommend schemes which come with a proven track record Shukla has a different approach. Umesh is well-known among his colleagues for picking up future performers. Most of his recommended funds have outperformed the market as well as the category. Two of his companies - Citrus Advisors, and I Can Financial Solutions provide these services. When asked how he manages to pick future outperformers; he says that he follows 4Ps which stands for performance, portfolio, process and person to choose funds.
- Past performance: For Shukla, past performance doesn’t merely mean the past returns of the fund. Instead, he analyses past performance to analyze the performance of the fund during bear and bull phase. This helps him shortlist funds which are able to limit losses in bear market and which are consistent.
- Portfolio: Umesh believes that portfolio construction of any fund plays an important role in performance. A fund manager can outperform the broader market by picking up high beta stocks. However, this is very risky for investors as NAV of such funds tend to decline quickly in a bear phase. A quality portfolio has a better chance to outperform across various market cycles.
- Process: Umesh says that a fund house should be process driven. Overdependence on star fund managers may affect the fund house adversely when they leave the organization. Thus, efficient processes ensure ability of a fund house to deal with such a situation.
- Person: Just like fund managers consider management quality of a company before picking a stock, Umesh looks at the management quality of a fund house. AMCs which are good at declaring dividends, have less number of investor grievances and value their distributor are high on his preference list.
When asked to share his personal investment style, Umesh said that he is a hardcore equity guy. In fact, over 90% of his investments is in equities that too via the Mutual Fund route. He believes that equity will continue to be the best performing assets class at least for a few decades.
Umesh has been working for the last 30 years. He has closely witnessed various market cycles. When asked about the shift in investor behavior over the years, he says, “Earlier, people used to redeem their equity investments whenever markets declined. However, things have started to change after the 2008 crisis. Though there were a lot of enquiries on what went wrong with the markets, only a few investors pressed the panic button and exited the equity market. Surprisingly, for the last three years, we have witnessed that many investors have been increasing equity exposure whenever market decline to take advantage of attractive valuations.”
With a large SIP base, Shukla caters to over 7,000 clients currently. When asked how he manages his huge clientele, he says that he has segmented his client base. Shukla has divided his clients into three broad categories – inactive, priority, and regular investors. A team of seven handles these client segments based on their relationship with clients and area of expertise.
About a quarter of his client base invest lumpsum, and do not follow their investments closely. Umesh has SIP book of close to Rs.1 crore per month. Almost 60% of Umesh's clients are active and invest monthly in mutual funds through SIP route.
Umesh's priority clients include relationships who have been investing with him for over 30 years. He is now focusing on growing his business by targeting the next generation of this priority set. In fact, Umesh has already converted many of the family members of his priority clients as his clients.
To grow his business further, Umesh believes that technology will be the key driver to grow his business. In fact, he has started leveraging technology to grow his business by using tools which help him in various activities like risk assessment, research and analysis etc.
Umesh’s journey is an inspiring case study for IFAs on how they can professionalize their practice by adopting technology and the right skills to scale new heights.