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First Saurashtra IFA to cross 200 cr MF AuM

Amit Kumar Mehta, Swadeshi Vastu Bhandar, Jamnagar

In a nutshell

  1. Swadeshi took 13 years to reach the 100 cr MF AuM milestone 3 years ago. In the next 3 years, it doubled its MF AuM to 200 crs - at a time when direct, disclosures and online were worrying many of its peers. No HNI money, no NRI money, no corporate money - purely retail equity money from over 2500 families with over 25,000 folios.

  2. Amitbhai describes his "only incoming, no outgoing" retail business model that has powered his AuM growth over the years and his simple strategies to help PPF, GOI Bonds and Post Office deposit clients to embrace equity funds and the uncluttered and uncomplicated manner in which he determines product suitability for his retail clients.

  3. Simplicity allows scale. Simplicity is at the core of all BIG ideas. Check out Amitbhai's simple yet highly effective model that is powering BIG growth for his firm.

We started our journey in mutual funds in the true sense in Sep 2000, when the NFOs of HDFC Income Fund and HDFC Balanced Fund were launched. Prior to that, in the MF space, we were selling assured return products of UTI - but in terms of market risk products, our start was in Sep 2000. We reached 100 cr MF AuM in 2013-14, some 13 years after we began selling MFs. In the next 3 years, we doubled our MF AuM which now stands at Rs.200 crores as of Jan 2017 across the 3 ARNs we have in our family, thus making us the first IFA in Saurashtra to cross the 200 cr MF AuM mark.


I am the third generation to steer our firm Swadeshi and my son Hansal is getting ready to take over as the 4th generation! Much before we got into mutual funds, we have been actively in a full range of fixed income and insurance products. We built up over the years, a large base of PPF and post office deposit customers and we continued servicing them even after commissions went away. We have been maintaining meticulous records of maturities of all deposits for all our clients, and each maturity becomes an occasion to revisit their asset allocation and guide them to appropriate choices. We have over 300 cr AuM in PPF, GOI bonds and PO deposits, which puts our overall AuM in excess of Rs.500 crores, not counting anything from the insurance side.

Only incoming, no outgoing

For me, the most satisfying aspect of our MF business is that ours is an entirely retail business - no HNIs, no NRIs, no corporate money. 85% of our MF AuM is in equity funds. We serve over 2500 families, we have over 25,000 MF folios and all our clients are based in Jamnagar city - and all of them are walk-in clients. This journey from 100 to 200 crs in the last 3 years has happened at a time when many of us in the industry have been distracted by threats of direct, disclosures and online distributors. We simply focused on our clients and nothing else, and I think that is what has paid off for us. We mind our business, not others'.

We have kept our business model and philosophy very simple and very focused, and that is what I think has helped us grow. The way I describe our business is : only incoming, no outgoing. HNI business in contrast is lot of incoming, lot of outgoing. Asset growth is always steady and sure with an "only incoming, no outgoing" model.

I am sharing below some of the simple steps we have taken to build our business, which I believe will continue to support our growth in the years ahead as well.

Product suitability

We have very simple thumb rules for product suitability, which work very well in the retail segment in terms of delivering value to clients without unnecessarily confusing them with complicated jargon.

  1. For an ideal equity allocation, our thumb rule is 100 - age of client. If client is 40 years old, 60% can go into equity, 40% in debt. As age advances, equity reduces.

  2. For any amount with time horizon less than 5 years, we recommend FDs like the HDFC Ltd 7.25% deposit. We do not allow customers to get into equity if they have less than 5 year horizon.

  3. For more than 5 year money, we recommend equity upto the asset allocation determined by age. We have entire maturity profiles of all fixed income instruments for each client, so we look at that to ensure that the current allocation under consideration can be confidently put away for at least 5 years or more.

People sell closed ended funds in the market. We sell open ended funds with 5 year lock-in agreed with every client. I don't sell gilt funds and duration funds. What I am not confident about, I don't sell. Fixed income is best served by actual fixed income products - at least in the retail space. Equity is best served by equity funds. Keep things simple and your confidence in recommending increases dramatically.

Lets move now from ST to Volvo

In the retail world, one needs to explain equity in a manner that they can readily understand and relate to. So, when explaining to a client why I think a GOI bond maturity should now go into equity funds, I tell them that all these years you have been travelling in an ST bus - now, its time to switch to a Volvo bus, which gets you to your destination faster. I never over-promise returns - these clients are not expecting the moon anyway. I tell them you have to stay invested for at least 5 years and after 5 years, you can be confident of 10% tax free return. Anything additional - consider it as a bonus. Never bank on anything more than 10% annualised over 5 years. Don't promise ST bus to a Mercedes car - ST to Volvo bus is what one should promise confidently.

Don't miss the bus

It is important to help clients get into equity at a time when market valuations are reasonable and long term prospects look encouraging. In order to get them to act, I make them understand that this is a bus they cannot afford to miss now. I talk to them about vision 2025 - a vision where India will emerge among the top 10 countries of the world. We are seeing progress around us already - there was a time when a family had 1 vehicle and 1 phone. Today every family member has a vehicle and a phone. As our standards of living keep increasing like this, our country progresses. As our country progresses, companies benefit from this progress and as equity owners, we get to participate in the progress of these companies. This is a transformational stage for India when we are leap-frogging from developing to developed. This is a journey that happens once in the lifetime of a country. This is a journey all of us must participate in. Don't get left out from this journey - don't miss this bus.

Simple steps to ensure quality service

My job is only advisory and I do not get involved in any kind of back office work at all - because that will take away my focus from my clients. At the same time, there are a couple of small things we have been taking care from the beginning, which help us deal with service in a seamless manner. From day one, all MF applications are always done in joint names (either or survivor) and nomination is compulsory for all applications through my office. That takes away all the headaches of transmission that one would have to otherwise get involved in from time to time.

Second - for every 50 crore increase in MF AuM, I add one more staff in my MF back office team to ensure that we are able to promptly service the growing client base. In recent years, KYC forms have been changed 4 times - we have gone back to our clients 4 times to get the new forms filled and signed - without any hitch, because we ensured we had adequate people to do this job efficiently.

Annual meet - with families

Every year, we conduct a meeting at our Town Hall - which is the largest place in Jamnagar, and can accommodate 800 guests. We call our clients and insist that they come as couples, and not alone. Children are all welcome as well. It is important for the lady of the house to get comfortable with investments, with us and with the thought of picking up a phone and calling us for any doubts or walking into our office without hesitation. That helps cement the relationship very strongly and binds the family to the financial goals we are working with them to fulfil.



We ensure that we meet every family we serve at least once a year - either in our office or in our town hall meet. The town hall meeting is never about complex jargon or about market views - it is always about reinforcing their conviction in equity, building their confidence in equity.

Trust is a result of truth

This is our simple motto. Never mislead, never mis-sell. Always tell the truth. Always think of what is right for the client. If you tell the truth, you will automatically get trusted. There is no need to do anything beyond this to win a customer's trust and at the same time, nothing short of the truth will actually win his trust, no matter what else you try.

Direct - disclosure - online

The three big issues that we find so many distributors worrying so much about are actually all non-issues for us. In the 3 years since direct plans have been launched, not even 0.5% of our clients have talked to us about direct plans. As for disclosure, in the retail world, the absolute amounts of commission earned per folio are anyway quite small to warrant discussions. In a few cases where clients asked us about commission disclosure after seeing their CAS statements, I showed them how little we were earning for all the support we give round the year and told them that they should seriously consider paying us something over and above the commissions!

On the subject of online, there are two aspects - online reporting and online fund selection. For online reporting, we have enabled our clients to log into our website and check their portfolio statements online any time. When it comes to online fund selection, I tell my clients one simple thing - go to ValueResearch or MoneyControl and track their 5 star rated funds. Every month, the list changes. Does this mean that every month you are going to switch your funds to ensure you remain in their 5 star rated funds? This is exactly how we will unnecessarily complicate our lives, because then we will have to get into alpha and beta to understand why a 5 star fund went down or a 4 star came up and so on. As the investor gets deeper into this, he gets confused, and loses track of long term investing for his goals. That's when I reiterate our philosophy - select good funds with long term track records and then mentally sign up for a 5 year lock in. Keep it simple and you succeed. Complicate your life, and you fail.

Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.

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