Pawan Mehar’s business was severely affected after the introduction of direct plans. His assets under advisory fell from Rs. 750 crore to Rs. 300 core. He talks to Cafemutual about how he and his team are taking on this challenge.
What inspired you to take up financial advisory?
I have spent more than 8 years with AMCs largely on the institutional sales side - with ICICI Prudential Mutual Fund & Birla Sun Life Mutual Fund. In both my assignments, my job was to acquire institutional clients - from small and medium enterprises (SMEs) and other bigger unexplored clients and markets.
This role was very challenging and made me think like an entrepreneur who has to explore, be creative, innovate and focus to create and expand his business irrespective of market conditions.
In this role my team and I not only managed to acquire clients in India but also I was instrumental in initializing & bringing a large chunk of AUM from FIIs in various funds (through cold calling). I taught my FII clients how to use idle money lying with custodians by investing in liquid and liquid plus funds. These achievements and excellent client relationships and respect earned from them gave me confidence to start my own business.
Other than this, being from fund industry, I have found a lot of gaps in advisory business. If you are creative and follow a structured approach the sky is the limit. This gave birth to Dhanbazaar in 2012.
Tell us about your initial journey. What kind of teething trouble did you face?
It was an exceptional and unbelievable start. In the first few months of business, we built more than Rs. 750 crore assets under advisory across product categories. We have built an excellent technology and research system which has helped us to serve, acquire and satisfy our clients.
The only teething problem which we faced was the introduction of direct plans. Our topline did get impacted due to the loss of business to direct plans. Otherwise we would have grown much bigger. The changes in tax structure of debt funds has also been a setback.
You come from an institutional sales background. Many of your initial set of clients were institutions. With direct plans coming in and with the changes in tax structure of debt funds, how are you recalibrating your business?
We have survived and managed to grow because I took this opportunity to challenge myself as an entrepreneur who has to think out of the box and increase bottom line.
We are building our business on the basic fundamentals to expand it from length and breadth of client segments.
How have you expanded your scope of offerings for retail, HNI and NRIs?
I have about 132 mixed set of clients (20 institutions, 2 FIIs, 10 HNIs, 25 NRIs, 75 retail individuals). From the last one year we have continuously broad based our clientele. We have now started offering solutions for HNIs, retail investors and NRIs.
Our expertise in managing institutional clients and deliverables - right from service, research to technology which has given us an edge over other IFAs. We have extended the same professionalism and expertise to HNIs, NRIs and individual wealth management and financial planning business.
We have replicated the same thought process, ideas, and client education methodology to this segment which has resulted in a great success. We do events, make strategic alliances and join communities to reach out to NRI clients.
We have done a lot of cross selling of products across all segments (mutual funds, real estate and insurance). We have channeled more than Rs. 75 crore to real estate. We have also advised on a project worth Rs. 200 crore which is in the pipeline. We have mobilized Rs. 3 crore in insurance premium. We have written 80 paid financial plans, 25 unpaid financial plans for NRIs. My business partner Gaurav Malik takes care of the financial planning vertical.
What is your differentiating factor?
We spend a lot of time in understanding the business of clients which helps us offer them the right solution. We don’t just recommend products. If we are recommending, say a bond fund, we explain to our clients what bond funds are and how they operate.
We have eight people who take care of our back office work. Our research report goes out to 500 institutions; if the report doesn’t go out any day they call us. We operate like an institution.
How much assets under management do you currently manage in mutual funds?
I manage Rs. 300 crore assets under advisory in mutual funds. I have a mix of clients - institutions, HNIs, NRIs, individuals and FIIs. Out of this, Rs. 20 crore is in equity and the rest in debt which includes income, short term funds, accrual, liquid and FMPs.
What were your biggest learnings as an advisor?
First and foremost you need to be focused. Secondly, you need perseverance and consistency to succeed in advisory business. Thirdly, you need to be adaptable to the changes affecting your business. Don’t be rigid.
How do you win the trust of your clients?
“Educating the client is best way to acquire, build, expand & retain the client” is my dictum which I have learnt in my professional assignments. This has helped me learn, innovate and transform.
Your advice to budding IFAs:
You need to be process oriented. Don’t be a product pusher. Advisory business is about selling a concept and dream, not about returns.