Before entering financial advisory, Ranjan was a textile engineer at Alok Industries for 18 years. Ask him about the big switch and he modestly admits that his wife encouraged him to change profession. She had been selling post office schemes and RDs for more than a decade and believed there was a huge potential in this business. For Ranjan, giving up steady income was a big risk. To test waters he decided to pursue financial advisory on a small scale along with his day job for three years. Confident that he could grow in the field he became a full-time financial advisor in 2016. In just six years, he has acquired 700 clients and manages assets worth Rs. 700 crore. Looking back, he wishes he had quit his job earlier.
Client acquisition – Different strategies for different client segments
Retail clients – Debt as an entry point and equity for the long term
Textiles manufacturing is labour intensive. Ranjan’s company, Alok industries had 30,000 employees. Moreover, the division in which he was working employed 2000 people. These were his first clients. Simultaneously he also approached his wife’s clients, friends and family.
His first meeting with the prospective client is devoted to understanding his background - income, expenses, likely financial goals and investment style. He tailors his recommendation basis this information.
If the investor is new to mutual funds, he first introduces them to liquid funds and FMPs. Sharing historical performance data of these funds he urges investors to invest a small amount of their FD investments in FMPs, and savings balance in liquid funds. Subsequently, every week he shares with them the returns generated by their investments. As they gain confidence in the category, they are introduced gradually to the other categories, shares Ranjan.
Next, he educates clients about asset allocation and risk return profile of different asset classes. On the basis of a financial plan, he allocates their corpus among different equity, debt and money market schemes.
As an Assistant Manager in his earlier organisation, he regularly interacted with many buyers and suppliers. These were typically super HNIs – those with net worth of Rs. 150 crore and above. He converted around 10% of these contacts into clients while at Alok industries.
In addition, he also requested his existing clients for referrals of their NRI relatives.
Overall, he has around 35 super HNI clients and 30 HNI clients.
The main challenge in converting corporate clients is getting foot in the door, says Ranjan. He first tries to acquire the CFO or a member from the investment committee as his client. Once they have a positive experience, he approaches the corporate treasury for investment.
Currently he has five corporate clients.
Ranjan visits his corporate clients at least once a week. In addition, he sets up a meeting with them before major events like elections to discuss the portfolio strategy with the investment management team.
In case of HNI clients, he reviews all their stock holdings daily to check if any change in investment is in order.
In addition, every month he shares a portfolio document with all his clients. The document shows the current investment value of their investment and the movement in last one month. A covering note, which explains the reason for the movement, his near term expectations about the market and the long-term return potential of equities accompanies it. To drive the point home, he shares his own portfolio with them.
Ranjan has realised that corporate assets tend to be volatile compared to retail assets. In fact, his MF AUM contracted from Rs. 1300 crore in March 2018 to Rs. 700 crore as institutional money moved into corporate FDs on back of market volatility. To build a relatively stable asset base, he has increased his focus on retail investors and SIPs