After completing his MBA, Bharat Bagla took up a job at Birla Global Finance Ltd in Mumbai in 2000 where he was responsible for selling consumer loans. While many young MBAs like him would aspire to climb the upper echelons of the corporate ladder, Bharat had other plans.
Back then, as part of the Birla Group of Companies, he got familiar with mutual fund distribution while interacting with his colleagues from MF distribution business. It was a brave move, when young Bharat quit his job to start a venture of his own. “It took me only a few weeks deliberation with colleagues to realize the opportunity MF distribution provided. Since then, my conviction in the business has served me well. Even today 16 years later, the potential presented by MF distribution remains immense,” says Bharat.
With merely a year’s professional experience, Bharat did not have enough savings to start his business. While many aspiring IFAs would normally work from home until they acquire enough number of clients to cover costs, he was clear about having an office right from the beginning. He learnt that cities like Mumbai, Chennai and Delhi already had several IFAs and large firms selling mutual funds. Also, it was not feasible for him to burn cash in metros where office rentals and cost of living was high. Thus, to find an economical alternative and an untapped market, Bharat decided to move to Kolkata with his family.
He started his business by renting a compact office in Kolkata with zero client base. “While reading a newspaper, I came across advertisements published by local businessmen who were advertising their products. They had their contact details in the ads. So I called them and set up meetings,” recalls Bharat. While it wasn’t so easy to get appointments he did manage to convert a few prospects after continued follow-ups.
Today, Bharat manages AUA of Rs. 225 crore in mutual funds with his ten-member staff in Kolkata. He also has a support office in Mumbai.
Bharat has achieved this spectacular growth by tapping a large base of business families whom he categorizes as ‘medium net worth individuals’. “Since there are lot of business families in Kolkata who have investible corpus of about Rs. 1-5 crore, my focus in on them,” says Bharat.
Sometimes, it is not easy for advisors to convince business owners to invest somewhere other than their own business. “I tell them that investing in your own business can be risky and they should not put all their eggs in one basket. To diversify, I encourage them to invest in mutual funds,” says Bharat.
Then there are other set of entrepreneurs who prefer to preserve their profits. Bharat recommends debt funds to such business owners. As a result, about 60% of his AUA is in debt funds. “I tell them that they can invest some portion of their profits in mutual funds and use it whenever they wish to invest more in their business. The allocation is usually to debt,” says Bharat.
Besides, Bharat says that business owners have some specific goals like children’s higher education, insurance and tax-saving which are their priorities. “Clients say that they have Rs.10-20 lakh to send their kids for overseas higher education after 10 years. I make them realize they would need much higher amount after factoring in inflation. They are taken aback after realizing how much they need to save,” says Bharat.
For tax-saving, Bharat recommends ELSS to his clients. “I pitch ELSS against PPF and explain the benefits of ELSS. I’m able to convince my clients to exhaust the entire 1.50 lakh investment limit in 80 C by investing in ELSS.”
When asked about his methodology to select funds, Bharat says that he looks at the AMC, then the scheme and the fund manager. As far as his personal investments are concerned, he has invested his entire savings in equities. “You have to put your money where your mouth is. If I’m asking my clients to invest in equities I should also invest in equity. I usually show my personal portfolio to my clients to convince them about the power of equities,” says Bharat.
Citing another such method used by him to convince clients, he says, “I started a SIP for my daughter when she turned 1. I usually give this example while explaining the importance of starting early,” says Bharat.
Bharat attributes his success to the confidence he gained after being in the business for all these years. He says that he has shifted his pitch from ‘products’ to ‘goals’ which has helped him convert prospects faster. “Earlier our conversation started with products. Now, we try to find out their aspirations, goals and give them a solution. Such conversations help us build a rapport and convert them easily,” explains Bharat.
With a client base of 5,000 and growing, Bharat finds it a challenge to cater to such a huge clientele. “We are in touch with them through email, WhatsApp and calls. However, there are limitations to these modes of communication. Thus, we are in the process of revamping our website, upgrading our software and launching an app to enable us to offer a superior experience to clients. With these upgrades, they will be able to do a lot of tasks. Our technology will empower them,” says Bharat. To grow his client base further, Bharat plans to advertise his services in Kolkata.
However, there are some challenges which Bharat needs to overcome. While business owners need no compromise on services, they are not ready to pay a fee. “It is difficult to ask for a 1% fee on an AUA of say Rs. 5 crore. Charging an initial signup fee of say Rs. 5,000 is feasible but I’m yet to explore it. The market is not ready for it yet,” observes Bharat.
Nevertheless, Bharat says that he will keep trying and show his value to command a fee.
Bharat’s journey is an inspiring case study for IFAs. He left his comfort zone by shifting to Kolkata and set out to make it big. “Never give up on your dreams,” says Bharat.