Tarraki Corner How Rajkot IFA Sandeep Gandhi convinces small business owners to invest in MFs

How Rajkot IFA Sandeep Gandhi convinces small business owners to invest in MFs

Rajkot IFA Sandeep Gandhi of Megafina has built a successful business around small business owners. Talking to Cafemutual, Gandhi shares his experience dealing with this segment who prefer investing in their own business.
Shreeta Rege Aug 1, 2018

Usually small business owners prefer re-investing their profits back in their businesses. Even if they invest in capital markets, they prefer to do so directly through stocks. In such a scenario, let us see how Rajkot based IFA of Megafina, Sandeep Gandhi dealt this challenge.

Journey to become an advisor

Gandhi started his journey in financial distribution business by selling primary market issues in 1989 as IPOs were a big rage then. However, Gandhi realised that the equity markets were beset with many problems such as information was often patchy and delayed; it was an era of physical transactions and investing was a cumbersome long drawn process. All this made IPOs and direct equity investments  too complicated and opaque.

Meanwhile, he noticed that his personal investment in mutual funds was delivering attractive returns reinforcing his interest in mutual funds. His research on mutual funds convinced him further that mutual funds are better suited for retail investors as they are more transparent, professionally managed and well regulated. Convinced, he entered mutual funds distribution in 1997.

Key challenges

A major hurdle faced by Gandhi was the attitude of the small business owners who comprised the bulk of his clients in direct equity and IPO markets. Most of his clients are small business owners and direct equity investors. They would often assert, ‘My business gives me 18% CAGR return why should I invest in mutual funds?’ or ‘XYZ stock has given me 100% return, this scheme has only given 14%. Why should I invest in it?’

To overcome these objections, he explained to them that every business has its cycle. For instance, a stationary shop is mostly profitable when schools reopen. The shop owner invests in new books to sell and if something goes wrong, the owner will incur a loss. He made them realize the importance of diversifying across businesses to reduce concentration risk and encouraged them to invest a small portion of their investible corpus in mutual funds.

However, the major challenge for him during his initial days was to convince his existing clients who invested in stocks to switch to mutual funds. To make them understand why mutual funds have an edge over direct equity, he asked them to compare overall portfolio returns of direct equity to mutual funds. To their surprise, many clients realised that their direct investments in stocks were not giving the returns that they thought were. This encouraged most of his clients to start investing in mutual funds.

Developing the distribution network

When ICICI Prudential Mutual Fund started its operation in Saurashtra and Kutch region, they sought Gandhi’s help in expanding their distribution network. Gandhi approached stock-brokers and sub brokers and encouraged them to become mutual fund distributors by pointing out the huge potential and vast opportunities in the MF space. This lead to nearly 100 new distributors joining the MF industry as distributors.

Additionally, he has worked on strengthening IFA community through training. He was the first president of advisory association, Saurashtra and Kutch Independent Financial Advisors Association (SKIFA). The association works on sharpening skills of the advisory community by holding knowledge sessions. Among a few topics covered at recent sessions are GST and dealing with wealthy. The association has over 200 members in Rajkot, covering 90% of IFA in the city.

Currently, Sandeep caters to around 500 families with assets under advisory of over Rs.150 crore in mutual funds.

Convincing small business owners and direct equity investors to invest in mutual funds have helped Sandeep become one of the largest distributors of Rajkot.

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Raghavendra Purohit · 8 months ago
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Ashish Vaidya · 8 months ago
Great journey. Sandipbhai is an idol for Rajkot IFAs... though he is a big name in rajkot.. still he positively maintained down to earth personality... Great.
Ravi Kalariya · 8 months ago
Great journey... Good efforts to channelise investment right investment product. Good going best wishes. Thank you
Hardik Vekaria · 8 months ago
My heartiest congragulations and best wishes & Many more achievements to come in future.
ABBASI ATTARIA · 8 months ago
JATIN · 8 months ago
Great vision ... Good efforts to investment products knowledge. Good going best wishes for further..
JITEN DAVE · 8 months ago
Great journey. Sandipbhai done good Job with Big Aim / Big Dream. He is down to earth personality. I always wishing to go ahead and ahead....Wishing further best for future
Mitesh · 8 months ago
Hello Everyone,

Very good article. My brief introduction - I am a new IFA who is trying to set up his practice. I have my own office and I am located in Borivali Mumbai. I am a hardworking chap with strong beliefs in teamwork and doing the right thing. Currently, I am having a tough time in getting leads and customers. So I am looking for some guidance from seasoned professionals here as to how I can get leads and clients. Please call me at 9082514106 if you need any additional info from me.

Ramados Trimurthy · 1 month ago
Try seeking your client s from closed friends/ relatives. Make a note of contacts and entry against them for SIP & Lumpsum you believe they will be ingesting.
Rushabh Malvaniya · 8 months ago
Great job done by Sandipbhai Gandhi for Investor to create long term wealth, also great personality and helpful nature for entire IFA community. Specially for new IFA if required any support and query personaly help & provide proper guidance.

I have personally experience, Thanks once again for your valuable support and are role model like us.....
Puneet Khandelwal · 8 months ago
Hello all !! I am a new IFA and from a very small town where people even don't know about mutual fund. I face too much problems to convince them to invest in mutual funds. Please guide me how to convince them to invest and need some tips about how can I grow my business and AUM ?
Thanks in advance.
Arvind Dubey · 8 months ago
Trully inspiring Sandeep you are inspiration. To budding IFA .
Mitesh · 5 months ago
Wow Fantastic, kudos to Sandeep Gandhi! Also Fellow IFA's, we are Mumbai CA Firm focusing on TDS, Taxation & GST. Call us in case of any query regarding these matters. My details are:

M N and Associates Chartered Accountant CA

100 Divya Gunjan, Bandar Pakhadi Road, Kandivali West, Mumbai, Maharashtra 400067

Phone: 090825 14106

We specialise in TDS, Income Tax Filing, Tax Planning, TDS Sale of Property, GST Registration, GST Returns, Loans, RERA Matters, Accounting & Financial Advisor.
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