‘When going gets tough, the tough gets going,’ the popular saying sums up Viral Shah’s journey in the financial advisory business. Viral and his wife Kruti started their financial advisory firm Jain Consultancy in Rajkot in 2008, the year when market unexpectedly crashed after a golden run!
While Kruti, an MBA Finance had worked with a national distributor, Viral was managing the family automobile distribution business. An entrepreneur at heart, Viral was confident that Kruti’s product knowledge combined with his sales expertise could help them build a strong financial advisory business. Moreover, markets were supportive scaling new highs till 2007. However, their launch year turned out to be a shocker. The market unexpectedly tanked and in the aftermath investors were reluctant to invest in equities.
Undeterred, the couple decided to continue their business. At the time when only a few financial advisors were actively selling debt mutual funds, the couple decided to harness the power of debt to grow their client base.
Convincing clients to invest
In order to acquire AUM faster, they started targeting HNIs, Ultra HNIs or corporate clients. While the couple did service retail clients in the initial years, once they established a stable practice, they referred their retail clients to other advisors. Even today, if a retail client approaches them, they refer him to other advisors or if the investor is knowledgeable about markets, they tell him to go direct.
The couple got the initial referrals from friends and family. Viral also tapped the contacts made in his automobile distribution business.
Initially, the couple pitched liquid funds to their corporate clients. They advised corporates to invest their surplus cash in liquid funds instead of current account, which earned them no interest. They also pitched liquid funds as a low risk non SLR investment to co-operative banks.
They urged their HNI and Ultra HNI clients to invest a portion of their FD funds in short to medium term debt funds. In 2008 the indexation benefit was available for debt investments held over 12 months. Thus, on post tax basis debt funds offered higher returns than bank FDs.
Over the next 2-3 years, the couple mainly recommended debt products. Once, the client grew more confident, they started recommending equity investments based on the client’s asset allocation.
Over the years, the couple have reached a healthy AUM of over Rs. 500 crore, of which Rs. 100 crore is in equity, Rs. 215 crore is in debt and Rs. 200 crore is in liquid funds.
Winning confidence of wealthy clients
Kruti and Viral know that bagging a wealthy investor or a corporate client is a long process. Here are the learnings from their experience in dealing with HNIs:
Do not push: Offer financial advice to win their confidence in your investment acumen
Start with small amounts: HNIs find it easier to entrust you with a small amount than a big sum
Be patient: In some cases, we have advised a prospect for a few years before getting any business from him, says Viral.
Benefits of maintaining small client base for an advisor and investor
Viral shares that having a small client base lets them give personalized attention to their clients and regularly track their portfolio to recommend any changes. In short, it allows for proactive engagement instead of a reactive approach that is responding when the client calls.
Carefully evaluating debt funds
As majority of their portfolio is in debt, the couple regularly evaluate debt funds based on their average maturity profile, credit quality, sectoral concentration. They also read rating agency research reports to ensure that the fund is not taking excess credit risk. Knowing that their clients value steady income over high returns the couple is careful about keeping the risks in check. This coupled with excellent service has won them the loyalty of their small (30 clients) but powerful client base.
The journey that started in 2008 in Rajkot has now spread to Ahmedabad and Kolkata also. The firm’s offerings too have grown from mutual funds to a one stop financial solution offering a variety of investment products like mutual funds, insurance, AIF and PMS and credit rating advisory services.
