Over 35 years ago when financial advisory was still at a nascent stage, IFA Hari Kamat chose it as his profession. Describing Goa as a conservative market where most people stuck to FDs even though some among them should ideally be investing in riskier investments basis their risk profile. Another factor responsible for individuals investing solely in bank FDs was the lack of awareness of financial products.
In fact, in his initial days, investors had no knowledge of even PPF. Hari had to explain prospective clients about their features, benefits and associated tax savings. However, he saw this raw market as an untapped opportunity. He understood that by taking baby steps he could slowly graduate his clients to riskier high yielding investments.
How did it all start?
Hari's first brush with financial advisory came during his college years. He entered the business to earn some pocket money. In those days, advisors could earn 2% commission by selling PPF. During this phase, he had a small client base, which helped him make around Rs. 150 a month.
Post college, he was recruited in a five star hotel. Over the next 13 months, fed up of the long erratic hours, he thought of launching his own business. As he had enjoyed selling PPF earlier, he decided to take up financial advisory as a profession in 1982. To ensure a professional and long-term set-up, he decided to rent an office and carefully maintain all client records from day one.
Acquiring new clients and building his product bouquet
Initially, Hari used to visit bank branches, offices to sell PPF. His strategy was to first acquire a client in an organisation and then reach out to his colleagues. It was easy to convince investors to invest in PPF as it was a government product offering tax deduction and attractive interest. Following this strategy, he acquired close to 5000 PPF clients.
Meanwhile, he was also on the lookout for new products, which would help his clients create wealth. This prompted him to add insurance (LIC) and later mutual funds (UTI in 1983) to his bouquet. Today, he focuses mainly on mutual funds as he believes it to a great avenue for wealth creation. However, he still services his PPF clients despite the fact that he no longer earns any commission on PPF.
Growing with clients
While PPF has been a client acquisition product, he gradually directs them to invest in higher yielding products in line with their risk profile. He first introduces his conservative clients to liquid funds to get them a flavour of mutual funds at lower risk. From there, he gradually introduces short-term products, FMP, hybrid funds and finally equity. The trajectory and product selection differs for each client based on their risk –return profile.
A key characteristic of Hari is that he talks more about risks than returns. Before advising clients to invest in hybrid or equity products, he shares his own portfolio with his clients. He shows them the periods when his investments gave negative returns and explains to them the risks involved. Mainly he ensures that his clients are mature enough to handle the volatility in equity markets. Thanks to his ‘share the negatives’ first approach, most of his clients do not panic during short market corrections.
Overall, his strategy of transitioning his clients from debt to equities has helped him acquire Rs. 575 crore of assets of which Rs. 400 crore is in equity funds while the balance is in debt.
He also started recommending systematic investing to his salaried clients way back in 2004. He encourages them to top up their SIPs periodically so that their savings grow with their income. Additionally, he asks his clients to put in any lump sum amounts when they receive bonus etc. This long-term disciplined investment has made close to 150 of his clients crorepatis. Moreover, his SIP book too stands at a robust Rs. 1.6 crore a month.
Delving deep into the client’s mind
Hari’s first meeting with a prospective client is exhaustive. He devotes the meeting towards understanding the complete ‘kundali’ of the client. Be it the number of dependents (both elderly and young), their age, client’s current debt, profession, income and understanding of financial products. This helps him better predict the client’s likely goal timeline and plan accordingly. Thanks to the data, he has a fair idea of when the client’s child would start a job. This coupled with the bond and trust he shares with his old clientele has helped him acquire many third-generation clients.
Being accessible always
Even today, Hari prefers face-to-face discussions to digital communication or client programs. He has found that his clients can better communicate their concerns and goals in a face-to-face meeting. To ensure that the clients can reach out to him at their convenience, he keeps his office open on holidays.
Client centric approach, dedication towards his profession and being upfront about risks has helped Hari build a strong presence in Goa.