imgbd Gamechangers: Dealing with direct

The Sehwag way of dealing with direct

Viksit Rohatgi, Blue Circle Financial Services, Gurgaon

25th November 2015

In a nutshell

In the last 4 years, Viksit Rohatgi's Blue Circle Financial Services has grown its AuM from 30 crs to over 110 crs and its client base from 250 Delhi based clients to 750 clients from across India and the world.He's done this, not by getting defensive about direct, but in true Sehwag style, by taking the challenge head on. He goes on the front foot, informs every customer about the direct option and ensures that they understand exactly how much commissions he is going to make before filling up an application form. Read on to understand how this front foot play has helped him win, as he shares his personal experiences in dealing with direct, for the benefit of the wider distribution fraternity, here on Gamechangers.


I have been hearing and reading a lot on the issue of direct plans and their potential and actual impact on the distribution business. I believe we need a fundamentally different approach to competition: rather than getting scared of competition, we must understand that competition is actually the mother of innovation and opportunity. History proves that for any industry, over a period of time competition provides enhanced business opportunities.

We may all have our views on the timing of introduction of direct plans and the process by which they were introduced. But the larger picture we need to appreciate is the thought process behind their introduction - of creating more options to increase MF penetration and enhance awareness of mutual funds. We have to recognize that the consumer is the King. We must learn to respect Time - it's we who have to change and evolve with Time and it's absolutely foolish of any one to expect the other way round.

Before I continue with my thoughts, I think I must first give you a background that has shaped these thoughts. My thoughts and beliefs are shaped purely out of personal on ground experience. I set up Blue Circle in 2011, prior to which I was associated with another large Delhi based advisory firm for over a decade. My AUMs have grown from approx 30 crs in 2011-2012 to approx 110 crs plus today. Monthly SIP contributions have multiplied from a meager sum of approxRs 3 Lacs to approxRs 40 Lacs, number of clients have grown from approx 250 to approx 725 +, and still growing. My clients are from Delhi NCR, Mumbai, Bangalore, Hyderabad, Assam, West Bengal, Himachal, Chennai, Goa to US, UK, Hong Kong, Singapore, Oman, Dubai, Germany, Turkey - and are all serviced by a single office at Gurgaon. The most comforting aspect has been clients' appreciation and complete satisfaction on advice and services which has resulted in referrals pouring in.

I have followed my principle of Trinity - "CIE" - Change, Ignite and Evolve- myself to adapt, survive and succeed in this new environment around me. I have been practicing religiously what I am sharing with you here and it has worked quite well for me.

1. Present your professional skills and service appropriately

The first thing that needs to be internalized is that while direct plans are cheaper, that's not all that an investor needs. Investors need good advice, and it is your job to present yourself as the person who will fill this gap. How many of the investors would have financial planning skills, or would have the understanding about the importance of Asset Allocation, understanding about the concept of Time Value of Money, or understanding of the product suitability, or understanding of the relevant risk of investing? How many of them may find time out of already busy and over burdened personal and professional schedules for all this and track their investments? Importance of Advisory and dependence on Advise shall always continue to be paramount. Need and Demand for Professional Advise and Services is only going to multiply manifold. Rather let me stick my neck out and say "What I forsee, soon it will be a privilege for investors to find worthy Advisory Professionals this easily."

At the same time if any investor has skills, understanding and knowledge for the concept of Financial Planning, ability and capability to transact and track all by himself, it is well within his Right to enjoy the cost effectiveness offered through Direct Plans. We all must accept and respect this Right of the investors.

Our job is to seek and serve the vast majority of investors who need advice. For that, we need to upgrade our learning, create robust in house systems, use modern technology for research, risk profiling, asset allocation and very importantly for portfolio presentation and communication. We need to present ourselves as proficient and competent advisors and providers of excellent service.

It goes without saying that all of this can be achieved only when we migrate from selling products to offering needs based solutions to our clients. Products can always be bought cheaper - needs based solutions is where we add value. Solutions where you help clients with a variety of "what if" scenarios, helps them take appropriate decisions, and demonstrates your value powerfully.

2. Disclose your commissions clearly

Yes, you read that right - disclose all your commissions (upfront, trail) in full detail - the exact amount - and do this before the application is filled. I do this regularly, and it works brilliantly. I believe transparency increases trust. I give a written document to my clients explaining all the commissions we earn - these are signed by me and accepted by my clients. When you are giving honest advice and delivering excellent service, you have nothing to fear. Being transparent about what and how you earn, actually puts that part of the equation out of the way, and allows you and your client to focus on the real thing - which is how to shape his investments to help him meet his financial goals. Trust me when I say this - if you are doing an honest job, be transparent on commissions - it will only build client confidence in you.

3. Let clients know about the existence of direct plans

I let my clients know that there is a direct plan and that it is cheaper. I don't spend too much time discussing it, but I do let them know. I also help them understand that the difference in the cost of direct and regular plans is the fees for my value added services. I believe clients have a right to make a choice and that it is our job to give them all the information, to help them make a choice that suits them best. That's a one-time conversation, clients understand it, appreciate our full disclosure, and then we move on to more meaningful conversations.

To conclude

I am not trying to suggest that I have seen no disappointments or that not a single client has gone direct. It has happened, but the overwhelming majority of my clients have appreciated our honest advice, good service and transparent approach, and have chosen to continue with us, with full information on the options available to them. Those who value our advice and approach have given us so many referrals that it has more than made up for the few who left. Most of our business growth has happened in these 3 years, when direct plans have been around. I think some part of this growth can be attributed to the fact that I treated competition not as a threat but an opportunity. Instead of getting scared about direct plans, I decided to take this new competitor head on, and it seems to be working rather well for me.

To end, I am not a poet and neither I am fond of reading any poetry, still I don't know whenever I find myself in a difficult situation, a few inspirational self thought lines come to my mind from somewhere and motivate me to accept the challenges that come in my way

Yeh Zindagi Agar Kuch Aisi Hoti, Koi Mushkil Koi Taklif Na Hoti, Koi Dard Koi Peeda Na Hoti

Sab Taraf Bus Khushiya Hi Khushiya Hoti

Yeh Zindagi Agar Kuch AisiHoti, Kabhi Dhoop, Kabhi Baarish Aur Kahbi Aandi Na Hoti

Sab Taraf Bus Komal Chaon Hi Hoti

Yeh Zindagi Agar Kuch Aisi Hoti, Koi Manzil Koi Aarzoo Na Hoti

Kuch Khone Ka Dar Aur Paane Ki Chahat Na Hoti

Aiye Doost, Fir Kuch Kar Dekhane Ki Kwaish Bhi Na Hoti

Aur Yeh Zindagi Zindagi Na Hoti, Yeh Zindagi Zindgai Na Hoti

Best wishes and regards

Viksit Rohatgi

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