Jain Investment, Mumbai is not just one of the leading advisory firms in the country, but also among the most respected.  Little wonder that several AMC executives trust them as their personal financial advisors!  Both partners – Rajesh Jha and Vinod Jain - worked for Birla Sun Life Distribution Company (BSDL) before deciding in Dec 2002 to venture out on their own – a decision that has certainly paid off handsomely for the duo. Jain Investment won two awards at the Wealth Forum Advisor Awards – 2009 : IFA of the Year – All India – Runner Up IFA of the Year – Western Region – Runner Up

Rajesh Jha, co-founder and CEO of Jain Investment tells us how Jain Investment evolved and shares his thoughts on the future of the advisory business.

How and when did you decide to become an independent financial advisor / wealth manager?

In the year 2000 Vinod, my partner in business and myself used to work with a reputed distribution house. We learned the business there and could foresee the vast potential in financial advisory space. Though it took us a few years before we started on our own but the seeds were sown there.

Tell us your story – the early days, the early challenges, how you dealt with them, your growth path

We started in a small way in 2002. Markets were not so supportive and resources were limited. Over the next 2 years we learned how to operate in the business place and also developed necessary relationships.

We started formal recruitment of advisors in 2004 and training them and developing them into quality advisors. Our close interaction with each of the individuals went a long way in developing a homogeneous mix of advisory setup.   

Over years we have grown into a 38 member setup. We have been a conservative setup and have tried to build the institution on a sound footing rather than growing aggressively. 

We have expanded in the western region and have set up offices in Pune & Goa apart from Mumbai.

We have a very efficiently managed operations and technology unit which supports a very stable and active advisory unit.

How would you define your business proposition – HNI focussed / retail focussed or a mix of all segments?

A mix of all segments.

How important is it to define what your business model is and what type of clients you will seek? In the early stages, should one go after any business that comes your way, or should you be very clear about your customer segmentation?

It is important but not a necessary condition for developing a successful business.

How important is marketing in an investment advisory firm?  What kind of marketing do you think works?  For example, direct mailing, newsletters, investment seminars, social networking etc?  Or is it largely word-of-mouth that counts?

I believe that this business demands the utmost trust from the service provider and hence marketing efforts will have its limited success. It will be largely word of mouth which will count. Over time a strong and credible brand building exercise will help.

What, in your opinion, do clients look for when choosing an advisor?

Clients look for the following attributes in an advisor:

1. Honesty
2. Trustworthy
3. Skill set
4. Knowledge

How important is it to be able to offer the widest range of investment options? Is there merit in being focussed on only mutual funds or does one have to offer insurance, PMS, direct equities, bonds and maybe even property? Is it important to aspire for 100% of wallet-share of your client? Is it an impossible aspiration?

When the margins were high one could have done well and grown with a single product (mutual fund) approach. Though it is early days of the changed environment I feel that expanding the product offerings will help balance the business and also benefit clients by getting a single window servicing.

What has been the biggest challenge you faced in your professional life and how did you deal with it?

When I decided to work for myself and got into this space it was tough. It was like going back by many years and starting career all over again. It has been the greatest challenge of our lives to build the set up brick by brick over many years. It could only be achieved with a single minded determination of Vinod, me and the entire team at Jain Investment.

In an advisory business, where clients place their trust in you personally, how do you manage to scale up and grow without losing touch with your old clients?

By putting effort in creating professionals who can replicate similar client experience. This can be achieved by putting in lots of effort during recruitment of advisors and imparting quality training to them. The setup would also need necessary checks and balances to effectively execute standardised quality advice.           

How do you try and differentiate yourself / your firm in a competitive market place?

We follow one basic principle of keeping our business simple for people offering services and clients. I don’t think there is a compelling need to differentiate or position oneself.

I don’t believe that the market place is competitive. There is huge business opportunity out there and dearth of quality advisors.

What are the key challenges that you have faced in trying to scale up your business and how have you tried to overcome these?

Getting manpower which can be developed into quality advisors has been a single largest challenge and it still remains. We are working our ways to successfully develop a large team of good quality, committed advisors. We have been trying innovative methods of recruitment, laterals from other industries and training them at the best possible quality.     

How do you see the investment advisory business changing in light of the no load regulations and SEBI’s desire to see the evolution of a fee based model?

Today there are close to 60,000 ARN holders who are active in the market in some form or the other. Top 200 ARN holders would be responsible for 75+% of the business. I see a good no. of the fringe players totally getting out of mutual funds business into Insurance, FD, Postal selling or into other others areas. New players will not enter this business. Existing players who are mid to small size will either aggressively focus on mutual funds or will diversify into whole lot of products.

I also expect evolution of technology enabled innovative models which would be scalable at low cost to emerge in the coming years.

Penetration for mutual funds will get limited and government and regulatory machineries will try and promote New Pension Scheme as an alternative to mutual funds.

Fees based model is a good idea but extremely difficult to implement in the Indian financial market place. The market and its constituents need to go through tremendous evolution in maturity for this transition from commission to fees based to be successful.          

How are you aligning your business to the new regulatory environment?  What changes have you made / are you making in your business to sustain profit growth in the future?

We have avoided taking drastic actions. We are working towards categorizing our clientele into 2 main categories - one fees based and other plain vanilla. We have distinguished the two segments along lines of our services offerings.

What is the secret of your success?

We followed a simple approach to business and focussed on client centric approach.