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  • Success Stories ‘Focus on behavioral aspects of clients rather than traditional risk profiling’

    ‘Focus on behavioral aspects of clients rather than traditional risk profiling’

    Harsh Gahlaut, CEO of FinEdge shares with us the journey of his online distribution firm.
    Suhail Chagla Nov 29, 2024

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    How did FinEdge start? What was the journey?

    We started in 2011 after seeing a gap in the banking sector. While banks were chasing the 0.01% of India's wealthy population, we saw an opportunity to serve a broader market.

    We started with robo model, which wasn't mainstream at the time. Initially, people were skeptical about our virtual approach but by 2015, we started seeing tailwinds on our platform.

     

    What were your initial challenges and how did you overcome them?

    Our business model was entirely unheard of at the time – having Delhi-based investment experts serving clients across India virtually. Building trust with the initial set of clients was extremely difficult, and it took us 5 years to reach Rs.100 crore AUM.

    Being bootstrapped helped us as we were under no pressure for immediate returns. We were prepared to not make money for the first 5 years, and having those realistic expectations from the beginning was crucial to our survival.

    We tried various approaches to build our initial client base. We started by reaching out to known contacts, then asked existing clients for references. We conducted corporate presentations to acquire clients. We also collaborated with AMCs for corporate activities. After reaching 4,000 clients, our growth became purely word-of-mouth, which continues to this day.

     

    How many clients do you have currently and what's your approach to client acquisition?

    We currently have about 21,000 clients. Post our first big batch of clients, we stopped active marketing or having sales targets. Everything is through word of mouth. In fact, we have tripled our client base in less than a year through referrals only.

     

    How do you retain clients?

    We believe in building long-term relationships. We provide personalized service through relationship managers and use our custom-built technology platform to enable better conversations.

    Our focus is on understanding clients' personal situations and goals. We have detailed conversations about budgets, income and expenses and we focus heavily on behavioral aspects rather than traditional risk profiling. This approach has helped us build extremely sticky relationships with our clients.

     

    What's your view on the growth of mutual fund investors in India?

    The growth in mutual funds is driven by several factors. First, regulatory improvements have made mutual funds more investor-friendly, and COVID accelerated digital adoption, and we've seen rising aspirations among younger generations.

    Better access to information and increased awareness about mutual funds have also contributed to this growth.

     

    What's next for FinEdge?

    Our growth plans are ambitious but focused. We're targeting 1 lakh active clients and aim to increase our monthly SIP book from the current approximately Rs.20 crore to Rs.70-75 crore.

    We're continuing to enhance our technology platform and are currently adding AI and ML modules, which has required changing codes. Importantly, we're maintaining our focus on core mutual fund business without diversifying into other products. Our goal is to expand our reach while maintaining the personalized service that has been key to our success.

     

    What's your outlook on the mutual fund industry?

    Innovation and value addition will be key to success in this space. From our perspective at FinEdge, we're already serving clients in 1,800 cities and 90 countries from a single office in Gurgaon, which demonstrates the scalability potential in this industry.

    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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