They say a doctor’s job is to cure sometimes, relive often but to give comfort always. Our job is similar to that of a doctor, says Bharat Pathak, Promoter & Director, Wealth Managers India.
What inspired you to take up advisory profession?
I started my career as a chartered accountant and entered the investment field in 1991. My company was a conventional tax and audit firm. I thought investment was the field where there was more room for creativity. It was the phase when a lot of people were attracted to equities due to the lure of Harshad Mehta. Thus, I also joined this crowd.
How did you grow your business?
I started as a sub-broker in Pune Stock Exchange in 1991. In 1994, a group of people including me became members of NSE. I started dealing in mutual funds in 1997. The mutual fund industry was still in its infancy. The interest rates were high during that period. Companies like L&T, Grasim and Tata Steel were paying 17% coupon on their bonds. I remember that my investors were getting 27% pre-tax return in Birla Income Scheme at that time. Tax rates were very high during that time, which came down from 50% to 40% later. This gave us an opportunity to approach corporates. Our analysis on Unit 64 also helped us build a good reputation in the market. It was very common for corporates to invest in Unit 64 to get dividends. We alerted corporates that there was a big difference in the NAV and the price which can lead to problems.
One of the major challenges in expanding is hiring and retaining the right talent. How have you managed to built up a loyal winning team?
It’s partly because of luck. We have an open dialogue with our employees. Everyone wants to progress in life. We discuss their aspirations and goals. We share a part of our profits with our team. People have financial needs which have to be fulfilled. We care for their aspirations. It may not be perfect but we have been able to create some balance in the organization.
How do you keep getting new clients?
We had more than 2000 clients when we separated with the broking company in 2001. We consciously trimmed our client base from 2000 to 350. We segmented the client profile and retained those clients whom we were comfortable dealing with. The clientele grew from 350 to 700 thereafter. Client centricity is not enough. It is important to identify the type of clients you want to work with. Growth has come from referrals. Also, we consciously try acquiring clients who have more money than time.
How do you go about identifying such clients?
You get to know this from the qualifications of a prospect. If your prospects have more time they’ll eat up your time.
How do you maintain contact with 700 clients?
Clients are always eager to know how their investments are performing. We have a portfolio review process at regular intervals. Sometimes, we tend to get more business from these portfolio review meetings. We do risk profiling of our clients. We follow an asset allocation for each portfolio. Some portfolios require changes in asset allocation. When you go to buy a car or a television set you have to choose a model. However, in our business the solution is customized to suit client’s needs. This is how we keep in touch with our clients.
How have you restructured your business after the abolition of entry load?
Direct channel was introduced in January 2008. Investors could save the entry load had they invested directly through the fund house. That was a wakeup call for the distribution community. When the direct channel was introduced we apprised all our clients on this development. We advised clients that they could invest directly through the fund house (to save entry load) and switch it under our ARN code so that we could get trail commission and also service them. Our business was built through fixed income which was never so lucrative from the revenue perspective. Majority of our business came from fixed income. We have adopted full trail model for both close-end and open-end funds.
How have direct plans impacted your fixed income business?
We haven’t seen direct plans impacting our business in a big way. If you bring value to the table investors also realize that they need to compensate the advisor. We hold PMS license. So we are shifting some of our fixed income clients in PMS where we can charge a fee, but then we will not earn any commission on these accounts.
Does having a presence in media help you get clients?
We regularly contribute articles in Sakaal newspaper. Also, we reach out to clients through seminars. We don’t necessarily do these activities with the objective of acquiring clients. Clients automatically come to you. People don’t start giving business after they see you on TV or read your article in a newspaper. It just helps create visibility.
What are your plans from here on?
I feel there is a need for responsible distributors. Investors are looking mainly to beat fixed deposit returns. You need to stick to asset allocation. This business can easily grow through referrals. We are also looking at succession planning. We are opposed to selling our business because you are handing over your relationships to someone who is paying you upfront. You don’t know how the successor will deal with the portfolios. If there are instances of mis-selling then the trust and reputation built by us gets tarnished. Things are simple when a family member joins the business. We are looking for like-minded professionals to work with.
What do you attribute your success to?
The success is not entirely because of me. Our company’s partner Ajit Khasnis has played a key role in shaping our organization. Our core team which comprises four members has been with our organization for more than 12 years. All of us think in a similar fashion and share same values. Trying to put client interests first has helped us succeed.
What is your advice to fellow IFAs?
There is a great future for responsible distributors in this business. It (investments) will not work like booking a movie or flight ticket online. People can go to internet for simple decisions but investing for your child’s future is a complex decision. People need advice for taking complex decisions. They need reassurance. Portfolio performance is not the only criteria to grow. They say a doctor’s job is to cure sometimes, relive often but to give comfort always. Our job is similar to that of a doctor.