Read the inspiring story of Gaurang who used to sell IPO forms and now caters to a large clientele in Baroda.
Not all entrepreneurs are churned out by B schools. This story of Baroda based adviser Gaurang Thakkar will certainly be an inspiration to all the budding IFAs who wish to make investment advisory as their profession.
At the age of 19, Gaurang used to sell IPO forms to support his family and fund his college education. However, this income did not even cover his household expense. To get an additional source of income, he took up insurance distribution at one of his friend’s suggestion.
One day, Gaurang went to a local stock exchange office to meet a prospect where he saw that people were standing in a long queue to buy IPO forms. Intrigued, Gaurang enquired and he was offered to become a sub broker by the person selling IPO forms.
Impressed by discovering equity markets, Gaurang diversified into broking and also took up MF distribution in 1991. From this, he started earning Rs.400-Rs.500 per month.
Everything was going well until Harshad Mehta scam hit the market in 1992. His IPO business almost came to a standstill. Since people were scared to invest in markets directly, Gaurang shifted his focus to mutual funds. Guarang believes that shifting to MFs was the turning point in his career.
He discovered that mutual fund is the only product which aligns investors’ interest with distributors. “Mutual fund is the only product in which distributors earning are completely depended on client’s growth. This is a win-win for all stakeholders – AMCs, distributors and investors.”
Gaurang has built a good reputation among his clients which helps him get unsolicited referrals. Here’s the secret to his successful referral rate. To make referrals work for him, he stays in touch with his existing clients regularly. He says that building client relationships may take consistent time and effort but it pays off. Gaurang invites his clients to lunch, sends a gift to clients on special occasions like birthday and anniversary. “Staying in touch with these activities gives a personal touch to professional relations,” says Gaurang.
Also, Gaurang uses multiple communication tools to reach out to his existing as well as prospective clients. Apart from referrals, another strategy which has helped Gaurang is to target second generation of existing clients. He says that advisers should involve the children of existing clients in review meetings so that they are able to win their trust too. “Once they get familiar with you and start earning, it is likely that you will be their first preference to seek investment advice.” The strategy has paid off. He now gets a larger wallet share from each family.
Today, Gaurang manages assets under advisory of Rs. 85 crore in mutual funds through a retail base.
Thakkar believes in empowering clients through financial knowledge. Even for a SIP of Rs. 500, he explains to his prospects about mutual funds at least for two hours. “It is better to set the expectation right from the beginning. Some may not like to work with you considering the volatility and risk of losing capital. However, the client who comes to you even after hearing this disclaimer is likely to stay invested with you at least for 10 years.”
He further said, “We never force investors to invest in mutual funds. Our focus has always been on educating and helping them take decisions on their own. We work in client interest and this has helped us grow.”
When asked how he manages his large client base, he says that he has a team of 15 which handles these clients based their area of expertise. Also, Thakkar alone tries to connect with most of them either by meeting them personally or through phone calls.
Gaurang believes in making sure his clients stay invested in a scheme long term. When asked to share his personal investment style, Thakkar says that he is a hardcore equity person. In fact, over 90% of his investments are in equity funds. He believes that equity will continue to be the best performing assets class at least for a few decades.
Gaurang does a lot of due diligence while selecting any scheme. This is how he goes about shortlisting the best funds for his clients. His first filter is fund size. He prefers large funds because they are usually not affected by large scale redemptions.
After scheme size, he looks at the past performance. He says that analyzing past performance helps him in determining the consistency of a fund during bear and bull phase. The consistency of past performance helps him shortlist funds which can limit losses in a bear market.
Lastly, he gives a lot of importance to process. He believes that a fund house should have a process driven approach to fund management. “A process driven approach is ideal as it helps if a star fund manager leaves a fund house,” believes Gaurang.
Having reached four figure client base milestone, Gaurang is now planning to expand his footprint in the adjoining districts through a sub-broking model.
This has to be supported by a robust technology and hence Thakkar is building technological capabilities to fuel his next level of growth. To make things paperless, he is planning to provide an online transaction facility to his clients through which they can manage their portfolios at a click.
Gaurang has tasted success with his sheer hard work and determination. From a humble beginning as a distributor of IPO forms, Gaurang has today become a well-known face among the advisory community in Gujarat. He is an inspiration for his peers and all the budding IFAs who aim to make it big in the advisory business.