‘Do you need to be associated with a large firm if you want to purse financial advisory?’ This question plagued Deepesh’s mind when the Karvy Wealth branch in which he was working closed down. Keen to work in the advisory space, Deepesh decided to start his own firm Grow Wealth in 2007. A year down the line came the recession followed by the entry load ban. Despite these setbacks, Deepesh persisted. Today he manages AUM of Rs. 70 crore with a SIP book of Rs. 1 crore spread over 155 clients.
In the initial few years of his business, Deepesh did not actively focus on building a SIP book. Majority of his income came from share broking and bond sales. However, in 2013, he realised that once activated, SIP in mutual funds would continually add to his AUM. In addition, he could target investors with a regular small investible corpus. He decided to develop a strategy to acquire SIP accounts.
Client targeting
Deepesh’s target segment was middle age salaried investors living in nuclear families. He reasoned that these investors would have a greater drive and discipline about saving for their financial goals. He felt that as these investors had family responsibility they were less likely to redeem their investments mid-way for discretionary expenses. Moreover, he observed that salaried individuals find it easier to invest through the SIP route as it is easier to allocate a fixed sum from their salary towards investment.
Client acquisition
Deepesh first approached his existing clients to increase wallet share. He explained to them that they could automate their savings by starting a SIP. He helped them see that instead of saving money for a few months and then investing an accumulated amount they could save regularly through SIP.
He also got a few clients from Facebook and referrals. Some investors expressed interest in his investment articles on Facebook. He connected with these investors and helped them see the benefit of investing under the guidance of financial planner.
He also combed through his acquaintance list to identify potential investors. He educated them on how mutual funds triumphed over traditional investment avenues in the long term and encouraged them to start investing through him. He recommended SIP as an option to these investors as they could mitigate the impact of market volatility and benefit from rupee cost averaging by choosing the SIP option.
He also conducted multiple corporate IAPs. In these sessions, he covered key financial topics such as impact of inflation and taxation on investor wealth, the importance of starting investments from an early age, how compounding helps grow wealth over long-term to name a few. He acquired 20-25 clients from these events.
Convincing clients to start a SIP
Deepesh segmented his clients in different buckets based on their professions and customised his pitch for each group. Broadly, the pitch focussed on the need for savings.
Deepesh follows a simple process while advising prospective clients. He first understands their existing investment portfolio, risk-appetite, income, expenses and identifies if they can increase their savings. In the next stage, he explains the features and benefits of mutual funds and SIP investing. He elaborates on the benefits of mutual funds compared to traditional investments. Only after the investor understands the basics and the risk involved does he recommend investment options corresponding to their different financial goals.
Typically, for clients with moderate risk appetite, he advises ultra-short term and short term fund for a 3-year goal, balanced and balanced advantage funds for five-year goals and equity funds if the client has an investment horizon of 7+ years.
He also explains to clients that SIP investing is a long-term process. He helps them understand that markets may be topsy-turvy in between but their long-term trajectory is upwards. Thus, he requests his clients to start an investment only if he is comfortable with a 100-month commitment. He requests the clients to look at a 100-month horizon and not panic by interim market movement.
Thanks to the 100-month pledge, his clients did not redeem their investments or stop their SIPs during the recent correction.
Ensuring clients do not sway
To ensure that his clients do not sway from their investment path, he regularly educates them through monthly email newsletter and his regular investment related posts on Facebook.
In addition, he schedules annual meeting with his clients where they evaluate the portfolio and decide if any rebalancing is required. He discourages his clients from checking their portfolio frequently, as he believes it creates panic during short-term market corrections.
He also organises an annual client event wherein he invites all his clients. In these events, all his clients can freely share their investment experience stories amongst themselves. This helps build confidence in minds of new clients as they can see that Deepesh has help build wealth for clients. It also motivates his new clients to continue their investments during short corrections and not give in to fear.
His focus on client acquisition and education has helped him increase his SIP book from Rs. 2.50 lakh to Rs. 1 crore. Moreover, his advice to clients to take the 100-month pledge has helped him ensure that his clients stay on track despite the market turmoil.
