8th October 2011

WF: Can you briefly give us a background about yourself, your partners and what brought you into the financial advisory profession?

Mehul Ved: I have done B.E Instrumentation, and then went on to do my CFA up to ADBF. I am also pursuing CFP. Equity has always been a passion for me, so I began with direct equity and later diversified into mutual funds. My partner, Mr. P.K.Shah is 18 years my senior. His forte is customer relationships. I handle the execution part. We set up Snazzy Wealth Creators 6 years ago. We offer comprehensive financial planning services to our clients.

When we started out, we thought that an AuM of 20-22 crores in 5 years is a good goal to aim for. We are now well above that mark. Our big break came in 2009 - where some of the large leads we had been working on, turned positive. In 2009, we doubled our AuM from our 2008 levels and have continued growing quite well since then.

From early 2009, we were strongly recommending equities to our clients - especially HNIs as we were completely convinced about a market recovery. We told clients to expect at least a 15-20% annualized return over a 3 year period from the early 2009 levels and got a lot of clients to invest at that time. That turned out very well for our clients and for us.

Today, our MF AuM is around Rs. 65 crores. Including PMS and other assets, our total AuM is around Rs. 85 crores.

WF: What is your business model - in terms of client segment, service proposition etc?

Mehul Ved: We have a very sharp retail focus. We deal directly with client - no sub-brokers. Our typical ticket size is Rs. 50,000 - not Rs. 500,000. We do have a few HNIs and corporate clients - but the majority are working class retail investors. Basically we ourselves come from service class background. We don't have too many businessmen as our clients.

We serve 2500 families. Initially, the average age of our clients was around 50. We have consciously tried to win younger clients too and today our average client age is 44. We believe 40 - 50 is the peak savings age for working class people - and are therefore well positioned from that point of view.

We offer full financial planning and our product range includes mutual funds, term plans and direct equity. We don't do PPF and FDs - we ask clients to use other brokers for those products.

From the day SEBI removed entry loads, we started charging 1.5% on all fresh equity fund transactions from all our customers.

WF: That's remarkable - people tell us that Ahmedabad is a very difficult market to charge fees. Didn't you encounter resistance from clients? Why do clients pay you in a market where most other advisors are unable to charge fees?

Mehul Ved: Though the market is rate sensitive, we are charging 1.5% from each and every client. If you explain properly, if you give regular service, people will listen and will pay fees.

We give lots of updates - by phone, through personal meetings, by mail - we interact on a regular basis. Even when the market was down in 2008-2009 we did not hide - we met clients and convinced them not to withdraw. Customers stayed back and things went well for all.

When we started charging, we encountered lot of resistance. We convinced clients with illustrations. Just like doctors are providing health solutions we are also providing financial solutions, so we also charge.

WF : What is more important to build an ability to charge - your financial planning advice or your service?

Mehul Ved: Honestly both are very important, planning is important and the services are also very important. The customer does not move from his seat - we go to meet him at his residence or office. Though I have an office with a convenient road frontage, no customer walks in. Our approach is walk into customers place every day. When a customer gives us a call, it has to be responded to in a day or two. Every client is met by one of our staff once in two months.

WF: Do you visit every single of your 2500 retail clients once in two months?

Mehul Ved: We have a team of 7 people. If the client gives an appointment we meet him else communicate by phone. Many clients are from the same office. When we go to one office, we can definitely meet 6 to 7 customers. If time permits we discuss about the portfolio, else I exchange greetings and ask the client to call us if anything is required.

WF: What is your opinion about opt in or opt out for the transaction fees? Are you likely to opt in or opt out and why?

Mehul Ved: Mostly I will be going for opt out. Nowadays we are projecting ourselves as a bank - when I talk to customers, I start with talking about liquid funds for idle balances. If I opt in, my customer will be charged for liquid fund transactions and I don't want that to happen. I want to make them comfortable with liquid funds, build my AuM with them, get 90% of their wallet share. And, in any case, we are charging for equity fund transactions at 1.5%.

WF: What are your plans for your firm for the next three years?

Mehul Ved: We are looking at 200 crore plus AuM in mutual funds itself. We are looking at growing our term plan business because we don't sell anything else other than the term plans. In life insurance, we are looking to sell in the range of 50 crore plus sum assured per month in term plans in the next 3 years. Right now, we are nowhere close to this - but we know that our clients are growing. If we grow along with our clients, we will get there.