A veteran in the financial advisory space, Madhu Sudan Uppal has come a long way. A noteworthy aspect of his practice is that he has used liquid funds to onboard first-time MF investors since 2001. This approach has gained importance among many other advisors only recently.
“By investing in debt funds, clients develop trust in mutual funds by seeing decent returns. Gradually, we advise them to sample equity through balanced funds and later on they start investing in equity funds. This gradual transmission helps clients understand and experience mutual funds better and helps us strengthen our relationship with them.” In this way, by helping clients understand the workings of the category, Madhu helps them enhance their knowledge about mutual funds. This in turns helps them make better, informed investment choices.
Thanks to this strategy, he has built assets under advisory (AUA) of Rs. 1,200 crore in mutual funds, spread across liquid and liquid plus funds, duration funds , FMPs and equity funds. His clientele includes a mix of corporates, HNIs, retail and SMEs.
Here’s how Uppal pitches liquid funds to SMEs and corporates. He explains them the benefits of investing in liquid funds as against parking money in a current account which offers zero interest. Sharing his strategy, he says, “I recommend prospects to park money in liquid funds on weekends. Typically, corporates and HNIs don’t require money on weekends; hence I advise them to invest their money on Friday and redeem on Monday. As the ticket size is large, they can easily earn a yield which can pay a month’s salary of an entry level manager. Many prospective clients have not only appreciated this strategy, but also valued this advice.”
Journey
Armed with a Chartered Accountant degree, he joined Jamna Auto Industries Ltd. in 1990 as an Accounts Officer. He rose to the level of Finance Head. His job involved managing overall finances of the company.
In 2001, he joined Delhi based advisory firm SPA Capital. After a four year stint at SPA Capital, he joined AK Capital and eventually floated his own advisory firm KNS Consulting in 2007.
Since Madhu shared a good rapport with his former clients, building a client base was not a challenge for him.
Success mantra
Madhu believes that staying in touch with clients is his biggest success mantra. Uppal and his four-member team meet clients at least once a month. He has over 700 clients and Uppal alone stays in touch with most of them either by meeting them personally or through phone calls.
He believes that staying in constant touch helps him strengthen relationships with clients. Good relationships ensure that he gets referrals, and also increases wallet share from existing clients. “We never ask for referrals. It is our clients who introduce us to their friends and family members. This has happened because of our strong relationship with clients.”
Madhu also attributes his success to his honesty. “I never sold products which didn’t suit my client needs. So being honest with my clients has helped me build a good rapport with them,” believes Madhu.
To sustain and grow his business, he makes sure that he adds new clients while actively servicing existing clients to retain them.
Love for fixed income
As a tax expert, he always sees investments with a tax angle. He was able to discover the beauty of fixed income funds, which are tax efficient and offer better returns than other traditional FD products, way ahead of many advisors, says Madhu.
Also, he sensed a huge opportunity in targeting fixed deposit customers of banks who like predictability. He introduced fixed income products offered by mutual funds to such investors. For instance, he pitched liquid funds against saving accounts and FMPs against FDs to such prospects. This strategy has helped him acquire a large number of clients.
Analyzing and recommending debt funds requires a different approach than shortlisting equity funds. So many of you may be curious to know how Uppal shortlists schemes for his clients. He are the three simple steps he follows while shortlisting debt schemes for his clients:
- Macro-economic and market movement
As a first step, Uppal sees if the economic condition of the country is benign to recommend debt funds. If the interest rates go up due to high inflation, he recommends his clients to take exposure to short duration funds. When interest rates move south, he advises his clients to take long durational calls.
- Portfolio
The second step is to analyze the portfolio of a fund. According to Madhu, portfolio of a fund plays a key role in the performance. Ideally, anyone can outperform the broader market by picking up high beta stocks. Hence, portfolio of a fund should have quality stocks or debt instruments. A quality portfolio has a better chance to outperform across various market cycles.
- Past performance
Finally, past performance of a fund matters to Uppal. This determines the performance of a fund during bear and bull phase. Consistency of past performance helps him shortlist funds which can limit losses in a bear market.
Future plans
To grow his business further, Uppal wants to expand his footprint across the country through a sub-broking model. In fact, he has already enrolled four sub-brokers.
Uppal’s story is testimony to the tremendous potential offered by fixed income products and how it could be one of the simplest tools for on boarding new investors to MFs. Do any of you feel similarly about liquid funds? Do tell us here.
