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  • Success Stories Advisor's success is a by-product of customers’ success

    Advisor's success is a by-product of customers’ success

    Nikhil Naik, a Mumbai-based financial advisor, has built assets under advisory of Rs 300 crore from a client base of 9,000 on the principle of providing a financial solution, Advisor Corner
    Anju Yadav Nov 9, 2010

    Nikhil Naik, a Mumbai-based financial advisor, has built assets under advisory of Rs 300 crore from a client base of 9,000 on the principle of providing a financial solution, says Anju Yadav. Read on to find out how

    Nikhil Naik Mumbai-based financial advisorWhat’s the key to your success?

    Our investment advisory business was started by my father in 1989. I joined him later in 1995 and totally involved in it by 1997. Those days there were only post office schemes, UTI schemes and LIC schemes. There was no concept of financial planning. The investment products were limited. There were only agents and distributors. My father always believed that a transaction did not end with the investment of the investor’s money. The transaction is complete only when the investor gets his money back. This philosophy of ours helped attract a large number of clients.

    What kind of market potential do you see in India?

    It is like a story of a guy who wants to sell shoes and he goes to foreign country and finds that nobody wears shoes there. He returns upset. Then another guy goes there and he too finds that nobody wears shoes. He senses a huge business opportunity and orders for as many shoes his supplier can ship. He saw in each person who did not wear a pair of shoes a customer of his. India is that kind of a story and will still continue to be that way for a long time. The opportunity is unlimited.

    How do you reach out to your clients?

    We have 9,000 clients. Earlier, we would send pamphlets. We now organise events for investment awareness. We even organise conferences on issues like grooming children, career counselling and child psychology. These events also help acquire new clients, apart from providing value for old clients. We also have an in-house magazine. We set up stalls in malls to create awareness about the benefits of regular savings and disciplined approach to savings.

    Which product do you sell more?

    We don’t sell. Our job is to just advice our clients. In some cases, we insist on customers buying a medical insurance policy. Nearly 70 per cent of our revenues are from mutual funds, 10 per cent from post office savings, 10 per cent from life insurance, about 5 per cent from general insurance and the rest from fee income.

    Do customers resist paying you a fee?

    We believe we need to first create value for our customers. Thereafter, expect the customers to pay for that value creation. Customers were paying a fee for investments made in mutual funds earlier. But they were not aware as the money was collected by the fund house. We now explain this to them and convince them that they in fact pay less now. We ask for a fee from existing clients. We don’t ask new clients for a fee unless we get to do client profiling.

    How has your business environment changed after the entry load ban?

    Lot of distributors have stopped selling mutual funds. Even the advisors with banks are not advising walk-in customers to invest in mutual funds. The customer complains that bank advisors advise them only on insurance. This is a very big challenge for the mutual fund industry. At the same time, advisors like us who are in this business for long will benefit from this situation. My cost of acquisition of clients has come down as a lot of mutual fund investors will turn to stable advisors like us.

    What’s the key thing that helps you build your business?

    I think it is the trust that clients have in us. And this we cannot do by saying that we are trustworthy. Creating wealth for ourselves is a by-product of customers’ success. We never bothered about our income. Our focus was on how many new clients we can add in a month or in a year.

    Were there challenges in the initial period?

    In those days, we did not have too many challenges because the competition then was with door to door agents and part time agents. There were no full time professionals in this business.

    What’s your target clientele?

    Initially, we would focus on retired people. But over a period of time we realised that India is a growing country and we need to expand our focus on younger generation also. Youngsters are the future millionaires or billionaires. And if we have them as our clients, then we would also grow with them.

    Do the media reports of mis-selling against distributors affect you?

    Initially, it used to affect us. The allegations also made some clients turn suspicious. We started taking prospective clients through our existing client’s profile. We started having a one page action plan for clients. A methodical approach resulted in greater trust in us. We generally never sell products until the client has developed a comfort level with us and we enjoy a certain comfort level with the clients.

    There were changes in ULIPs structure after a tussle between IRDA and SEBI. Are ULIPs now more investor friendly?

    ULIPs can still be mis-sold. You cannot curb mis-selling completely.  Why should exit be allowed in ULIPs after five years? The lock-in should be for 10 years. Life insurance is meant for very long term wealth creation.

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