2nd January 2012

WF: Can you recount for us briefly how you got into this business and how has the journey been so far?

Nilesh Gurnani: My father was an IFA in Indore, primarily focusing on UTI & small savings. Since I had just appeared for my CET, he advised that I check out this field. I started in the month of July 1991 and by the year end I had my first NFO which was Master Gain 92 - that was my first real initiation into this business.

I started with a small savings, PPF and UTI. Then came SBI Mutual Fund. We then ventured into company deposits - did a lot of business with Birla Global Finance, Tata Finance etc. That business came down after the NBFC setbacks. When Kothari Pioneer came as one of the first private sector mutual funds, we started doing business with them. I started reading a lot and began to understand the power of mutual funds. That's how I developed a passion for mutual funds and began focusing more and more on mutual funds.

Today, we serve over 500 families in Indore. Our mutual fund AuM is around Rs. 85 crores. We still do some amount of fixed deposits, recurring deposits and small savings - but mutual funds are the biggest piece of our business.

WF : What about insurance? Do you advice your clients on insurance or do you stick to only term plans purely from a protection point of view?

Nilesh Gurnani : No, I actually disagree with many advisors who only stick to term plans. I don't think all insurance products are bad or are unsuited to client requirements - in fact there are a number of products that are very well suited to meet client needs.

I have for example some clients whose business involves significant risk - some are in the construction business, some are speculators in oil and commodities. What they are looking for is guaranteed return from money that they entrust to me - which is basically for their family. This is important for them as the nature of their business is high risk and they want to de-risk their family to some extent. I offer them whole life policies, which suits their needs perfectly. I explain to them that the returns are likely to be only around 6% CAGR - but they are happy with guaranteed returns, even if they are a little on the lower side. They say that their business returns are giving 20 to 25% return, so all they are looking for is safety of money that is invested through me. For them, term insurance is like getting a rented house and whole life is like owning a house.

There are many such instances, where the right insurance product is actually the best solution for client needs. All insurance products are not bad - it is wrong to club everything with high cost ULIPs and dump the entire category. You have to do your homework properly and identify good products for your clients.

WF: How have you adjusted to the lower margin environment since Aug 2009?

Nilesh Gurnani: The primary factor is that I have always maintained a very strict control on expenses. I have kept my overheads low, operated with the minimum infrastructure that I need, not done anything fancy - and that has helped when margins came down in mutual funds. Secondly, the parallel businesses of deposits and insurance also supported revenues to some extent. But yes, margins are squeezed. I don't think we are at a situation today in Indore market where we can start charging for advice to compensate for lower commissions.

WF: Even as margins continue to be a challenge, business volumes have also fallen sharply in 2011, which is impacting IFA's profitability quite seriously. What are some of the steps you have taken to keep up business momentum?

Nilesh Gurnani: To be honest, we implemented the activity management guidelines that you shared with us a few months ago in the i-mentor sessions - and I must say, that is helping us a lot.

We have created two excel sheets - one for activity management for every member of staff starting from me and another for daily log-ins by each member of staff, including me.

We have set targets for activity levels for each of our 5 client facing members. I for example have a daily target of meeting 3 existing clients - of which I must go on 2 client calls, and must meet 1 client in our office. Then I have to interact with at least one prospect - either meet or at least a phone call. Then I must conduct at least 1 portfolio review every day. In this way, I have mapped out daily activity targets for all 5 of us - and this is tracked on a daily basis using simple excel sheets. This has given tremendous focus to all of us and we have seen volumes increase by sheer activity management at a micro level.

We also have an excel sheet for daily log-ins, where all products are mapped and staff are encouraged to log-in something every day - it doesn't matter whether the product is an equity fund, debt fund, insurance, deposit or anything else. But the idea is to track daily log-ins which ties in with the activity management.

The other aspect in activity management that is helping me a lot is that after segregating my clients on an ABC analysis, I started asking some of my B & C category clients to come to our office rather than going an meeting all clients in their offices/homes. That has freed up a lot more time to do more client interactions and look for more business opportunities.

The final piece on activity management is that we have completely segregated processing work for each product. So, one person in our office is the expert in mutual fund processing and operations, another is an expert in post office and small savings, a third person is the insurance expert etc. This allows me to completely focus on sales and on winning new business.

Business environment is tough - but there is a lot that we can do internally to improve our own efficiency and make more time for client interactions. The more we interact, the better are the chances of getting more business.

And now, with the help of your new Wealth Planner software, we are a lot more confident of meeting new clients, meeting prospects and explaining how we can advise them in a process oriented manner. Clients are also happy to see some of these reports - which go beyond the excel sheets we used to share with them.

WF: What are your plans for your business over the next 3 years?

Nilesh Gurnani: One is I am sharpening focus in terms of products. I am getting out of post office and general insurance - and will focus more on mutual funds and life insurance. These are businesses which I am convinced have a great future.

Second is to sharpen focus on the advisory part. Many of my new client acquisitions in recent times are people who are dissatisfied with their bank RMs. We have integrity, we are not incentive driven - which sets us apart from most bank RMs. We are in no rush to earn from our clients today - if I acquire a client, I know that I will earn enough from him over the next 5 - 10 years.

As we sharpen our advisory and presentation skills, there is no reason why we cannot attract more and more bank customers. Sharpening advisory skills also means getting professional qualifications. I am half way through my CFP course and hope to complete it soon.

And finally, my focus going forward is on assets. I would like to concentrate on building assets over the next 3 years. I have limited time and my time has to be best spent on increasing my firm's assets. That will also mean attracting more HNI clients - primarily from the bank segment.