From humble beginnings as a distributor of IPO forms, Gujarat based Kirit Shah is today one of the renowned IFAs in the State. An LLB, Kirit began his career as an accountant at a private firm. “I was clueless about which business to start so I started selling IPO forms after quitting my job,” recalls Kirit.
Shortly into this line of work, Kirit sensed the potential of demand for products beyond equities. He also realized that investors were seeking holistic advice on their finances. With a view to expand his offerings, Kirit forayed in fixed deposits and insurance. Back then, private sector fund houses were just making an entry in the industry, and Kirit began researching them. In 2000, one of his friends who understood mutual funds advised him to explore Mutual Fund distribution.
Since then there has been no looking back. In a span of 16 years, Kirit has built an impressive Rs. 240 crore AUA in mutual funds with a client base of over 5,000 individuals.
Kirit’s approach to financial planning is unique. He explores Value Averaging Investment Plan (VIP) for most of his clients. He believes that retail investors need an automated way to invest as and when markets correct.
Like SIPs, VIP requires monthly contributions but the amount of contribution changes depending on the gyrations in the market. For instance, if the market falls, investors invest more and buy more units at lesser cost, thus averaging out their investments. Alternatively, investors who wish to accumulate a fixed amount to meet a goal can opt for VIP. In this case, the investor sets a target value of portfolio that they desire to accumulate over a certain period of time. With each passing month, the plan adjusts the subsequent contributions as per the relative gain or fall on the original portfolio value from the target portfolio value.
Kirit does value averaging in direct equities as well as mutual funds. Many of his clients have been able to meet their goals through value averaging.
When asked how he chooses a fund for channelling investments through VIP, he says that he gives a lot of importance to the AMC brand, followed by the track record of the fund manager and finally the fund management process.
As Kirit began his journey over a decade ago, he already had a large clientele. When he ventured into mutual funds, he was able to switch many of his direct equity investors into mutual funds. Other than referrals, Kirit also conducts IAPs to educate investors which helps him acquire new clients, though that his not his sole intention.
Financial advisory is a service and making sure advisors exceed their client expectations is the mantra to retain existing clients and generate referrals. And for advisors like Kirit, building trust is at the core of what solutions he offers. “I get a majority of my new clients through referrals and many of them have stayed with me since the beginning.”
Just like gaining trust takes time, so does wealth creation. “I onboard only those clients to equity who have a five-year time or more time horizon. Wealth creation needs time and patience and I am wary of clients seeking quick returns,” asserts Shah.
Managing over 5,000 clients is anything but easy. To make sure they get the best services, Kirit adopted technology to keep them abreast of their portfolios. As part of his after sales services, Shah shares daily performance reports to his clients.
While technology plays its part, human interface is essential to know clients well as this helps Kirit helps provide clients bespoke solutions. Thus, he meets them at least once in three months which helps him keep updated about their changing aspirations. “Meeting them personally gives us an insight into what is changing in their lives. Some clients may have got a promotion or inherited wealth and you would never come to know about it unless you meet them. This not only helps us increase our level of engagement with clients, but also allows us to manage a higher share of their assets,” says Kirit.
Shift in investor behaviour and trends
Kirit says that investors have matured over the last three to five years and are beginning to understand the importance of financial planning. Also, they are embracing technology, though with a human touch. “Investors are open to invest online but with the help of an adviser. Clients still look for personalised services and want an adviser to stay by their side during difficult times,” observes Kirit.
Another visible trend Kirit observed is the shift from direct equity to mutual funds. “Many of my clients who used to invest in direct equities have shifted to mutual funds because they could not withstand volatility,” says Kirit.
Pointing out yet another trend, Kirit says, “The population of young investors is increasing and the dominance of technology will increase as they will look to receive services on the go.”
Kirit’s aim is to reach an AUA of Rs. 1,000 crore in the next two years. He is planning to adopt the RIA model and separate his distribution and advisory services. “Now, I want to focus more on financial planning for my clients as it is the need of the hour,” says Kirit.
To support his growth, he wants to expand his team, particularly by recruiting youngsters who can bring fresh ideas to meet the growing demands of the business. Going ahead, his daughter who is pursuing CA would be managing his business.
Over the course of his journey Kirit has evolved his business to meet consumer preferences and aspirations and this has helped him grow his advisory business. This adaptability combined with his entrepreneurial spirit is inspiring example for budding advisors.