Pramod Rungta, started his career as a CA but slowly got interested in advisory business. Pallabika Ganguly traces his evolution from an auditor to advisor
Pramod Rungta belongs to a family of chartered accountant professionals; so it was natural that he would do his CA and join his father’s company - P.D.Rungta and Co in 1992. Pramod’s father showed him the broad direction but Pramod had to tread the path on his own. His father did not share the client base with him, leaving it to Pramod to develop his own clientele in Kolkata. During those days, he knew only six to seven people - mostly his relative and friends whom he could approach with his services.
Slowly, he developed his client base through references and his clientele grew to fifty from a mere seven clients in eight years and the company expanded to Bhagalpur and Raipur.
In 1998, one of his clients was keen to invest in mutual funds and asked his guidance on investment. So, Pramod acquired an ARN number and guided his client in mutual fund investment. However, he did not pay too much attention to this advisory business before one of his partners in Raipur educated him about mutual fund investment and importance of life insurance. Pramod was impressed with his partner’s knowledge and was happy to get trained under him on mutual fund investment and insurance.
After the training Pramod first started investing his own money in MFs and also got a proper risk cover for him. When he became satisfied seeing the returns in mutual fund he approached his existing clientele for mutual fund investment. “During those days the mutual fund brokers were paid 3 percent to 3.5 percent on first time investment. These commission figures attracted me and I decided to initiate this business along with my CA service,” recalls Pramod.
His first client was very impressed by his detailed explanation on how a thousand rupee SIP for thirty years can garner an amount of one crore. His client was ready to invest two lakh every year through SIP. “We believe in investing through SIP as it averages out the market risk. Currently we are able to generate Rs 20 lakh in SIP every month,” claims Pramod.
The firm usually does not suggest investors to make lump-sum investment as it believes in investing through SIP and STP. Currently, the firm has an AUM of Rs 8 crore but has aggressive plans to grow its mutual fund and insurance business. Last year, it has roped in Sanjeev Mundhra from one of the renowned AMCs to expand its investment business. “He is a seasoned investment professional and we have charted a number of plans together to expand our mutual fund and insurance business,” reveals Pramod.
Unique Marketing technique
Pramod is associated with various clubs in Kolkata and keeps on educating people on investment by conducting lectures in these places. He conducts lectures on tax planning through investment and the importance of investing in mutual fund through SIP.
The firm also plans to initiate quarterly newsletters and a weekly e- bulletin for educating its clients on investments. Pramod is a part of google group which already has ten thousand members. In addition to his existing clients, he plans to send the newsletter and weekly e-bulletin to the members in the yahoo group.
Fee based model
Pramod has started charging the clients for his advisory and has got marginal success in it. “We have started charging half a percent of the investment amount to clients as fee but it is very difficult to get paid for our advisory service. Out of ten clients only three are ready to pay the advisory fee. In a year or two we have plans to convert our advisory services into a fee based model,” says Pramod.
Advice to upcoming IFAs
According to Pramod, new comers in this industry are not aggressive enough with their advisory business. They mainly pursue it as a side business. “If new IFAs show any dedication towards this business, they will definitely get success as India is a growing country and the MF industry is under penetrated,” says Pramod.