It is important to understand what the customer needs rather than focusing too much on returns. The objective should be to generate happy experiences, which will naturally lead to more clients coming your way, feels Amit Bivalkar, MD and CEO, Sapient Wealth Advisors & Brokers.
Amit was speaking on the subject ‘Scaling up your Business’ at Aditya Birla Sun Life Mutual Fund - Cafemutual new webinar series 'Lessons from the Masters'. KS Rao, Head Investor Education and Distribution Development, ABSL Mutual Fund moderated this session.
Here are some of the key takeaways:
Know the don’ts
Amit feels that since individual MFDs do not report to anyone, they learn their mistakes the hard way. Therefore, it is critical to consult someone before making business decisions. At Sapient, all the directors have a soundboard to know if their business decisions are right. The idea is to use the collective experience within the organisation to follow the process of elimination i.e. know what you should not do - be it in case of fund house selection, scheme selection or any business decision.
Agile business plan
Amit said that they take long-term business decisions based on the outcome of their monthly meet of promoters and directors. Here they discuss ways to remain adaptable and agile to make swift moves. They also set targets for the directors to ensure that they do not get complacent. Currently, the focus is also on acquiring Generation Z MFDs to take the business to new highs.
Using team to scale up
Contrary to many MFDs strategy, Amit started with a team and an office. He believes that individual talent can win you games but you need teamwork to win championships. Besides, if a person tries to do everything - from backend to sales to research - it will be very difficult to grow. So he advises to start small with a lean team and build gradually.
“If individual effort goes to a group it can do wonders. Whether it is society, civilization or company, it is likely to grow only when everyone works together,” Amit said.
Managing team
Amit believes that good talent comes at a price, therefore MFDs should not hesitate to spend. Further, they must encourage and give incentive to their employees to retain good talent. MFDs should try to understand what their employees need instead of dictating to them what they need to do.
Amit said that they have contributed to their employees' wealth creation journey. They have matched their SIP amount and given them the entire sum of money after five years. And that is how they have managed to retain some of the best talents.
While many MFDs do not hire because they fear that their team will walk away with clientele and other business secrets, Amit looks to hire people smarter than him. He feels this way one need not keep telling their employees what to do and the business runs efficiently.
“Hire smart people. Remember competition makes us grow faster but collaboration makes us get better,” said Amit.
Tackling competition from direct plan
Amit said that the discussion with clients should move from costs to value. He feels clients can pay advisory fees of Rs.30 lakh a year if they see value in your advice. Therefore, MFDs and advisors should be able to justify their worth.
“Many MFDs say SIP karo mast raho and we all know what has happened to investors who have done SIP blindly for the last five years.”
Therefore, MFDs will have to be innovative - not just in products but in the way of communication as well. Do not just copy paste WhatsApp forwards; instead, create something original to communicate with clients. For instance, MFDs can change their communication from returns to absolute value. If you tell a client that his wealth has grown from Rs. 40 lakh to 60 lakh, he will feel much better than listening to the rate of return.
A few more highlights
- Key to success is to have transparency, authenticity and accountability with clients
- Stay in constant touch with clients especially during tough times
- RIA model gives you an opportunity to become better at processes. It is like getting ISO 9001 certification
- A rough calculation says SEBI charge Rs.8000 per month to get RIA branding. So, why not!
- Pure MFDs will stay relevant for retail and mass affluent segment
- HNIs and ultra HNIs are more likely to seek services of RIAs going forward
- Be happy with what we have, be excited about what we want
- Creating happy investors is a long journey. It is not about returns they generate from funds, it is about what goals they have achieved
- Your clients will bring more investors if they are happy with you
- Sell products that are win-win for all stakeholders- AMCs, MFDs and investors
- Let your competition be busy with your tail rather than attacking clients at the top of your pyrami
