Main Bhi Fund Guru

Mukeshbhai's unique response to the RIA challenge

Mukesh Patel, Khushi Insurance & Investments, Anand

In a nutshell

Mukesh Patel is a breath of fresh air amid the worried and harried independent distribution fraternity. He chose to make a 7 year old part time profession of fund distribution into a full time vocation in 2015 - amidst all the uncertainty prevailing on regulations, commission caps, service tax et al. He has rapidly scaled up his MF AuM in the small town of Anand in Gujarat, to an impressive Rs.57 crores, with plans to grow this to Rs.200 crores by March 2019, of which Rs.100 crore is planned from the hugely underserved NRI market. His response to the RIA challenge : why worry about the future 3 years from today when I can focus on growth and make my own future in these 3 years? Read on to understand how this Fund Guru is planning to utilize the next 3 years to make himself future ready.

I am an engineer by education. I have been an instructor in Mechanical Motor Vehicles trade in the Craftsmen Training Scheme of GoI's Industrial Training Institute (ITI). I did this job until Feb 2015. It is only in Feb 2015 that I became a full time distributor.

From LIC agent to SIP champion

My journey in financial distribution started on a part time basis in 2004 with an LIC agency. In Jan 2008, I ventured into mutual fund distribution. From day 1, I focused only on SIPs. Once I began mutual fund distribution, I gradually reduced my LIC business. Today, most of my business is in mutual funds and that too in SIPs.

3 years ago, my MF AuM was Rs. 11 crores. Today, it stands at Rs. 57 crores from 600 clients. My SIP book is today Rs. 54 lakhs per month. In 2013, when I expressed a desire to my family to get into distribution on a full time basis, they were very worried. It took me two years to convince my family that giving full time attention to fund distribution will be a wise move. Ever since I quit my job in Feb 2015, I have been able to ramp up my business significantly since I now spend the entire day - from morning 7 am to night 10 pm in this business only.

Set expectations upfront

My belief is that when we meet new clients and educate them about SIPs, we must first give all the bad news and prepare them for the down side. If you don't do this, they will never see the upside in the long term. I tell clients very clearly that we will not start a SIP unless they have a minimum 5 years horizon. I get a paper signed off by my clients that if there is a dip in markets in the first 2 years of the SIP, they agree to invest more rather than think of redeeming. I have prepared in Gujarati, a one page concept paper on what an SIP is and how to benefit from it, which I explain to clients before we start a SIP. It is on this basis that they readily sign up to an agreement that they will use market dips to buy more rather than stop SIPs.

SIP karao, Life banao

I have a slogan which I use all the time: "SIP karao, Life banao". This slogan is used in all my educational material and in all my promotional material. I write articles in the local newspaper in Anand where I reiterate the power of SIPs to lead investors to financial success. I explain to investors the benefits of SIPs and compare SIP investing to LIC investing to show clearly why SIPs are the sensible choice.

Two investments are critical: technology and time

I am a firm believer in technology and in providing my clients with tech based access. I have invested in the Red Vision software and its mobile app, and have made this app available to all my clients. I am also a firm believer that you need to give time to build each relationship. You need to spend hours with each client to help them get comfortable. There have been occasions where I have parked client money in only liquid funds for upto a year before gradually moving them into equity. There are two investments we need to make in this business to be successful: time and technology.

I am now going to open an office in Nadiad, which is close to Anand. There are huge amounts of investors who will be willing to invest in SIPs provided somebody approaches them and educates them the right way. Every insurance investor is a SIP candidate in my view. The market opportunity is huge. We just have to reach out to as many people as we can. I conduct IAPs regularly, and I don't depend on external speakers - I make my presentations on my own. IAPs are a great way to reach out to more and more investors. I speak from my personal experience as a SIP investor. I have laminated my account statements of my old and ongoing SIPs to show in real life what SIPs can do in terms of creating wealth.

NRI market is a huge opportunity

The other big focus area for me is NRIs. There is tremendous appetite among NRIs to invest in India. Again, all that is required is to reach out to them. For last 3 years - Sep 14, Sep 15 and Sep 16, I have visited UK and met NRI investors and convinced them to invest in Indian equity funds. This year, I conducted an investor session in London, where 75 NRIs participated. I visited Nairobi this year and have drawn up plans to visit Tanzania and Uganda shortly. Money is substantial in these NRI markets, interest level is high. I am seeing a steady stream of lumpsum investments from NRI clients. In recent months, I have been getting Rs.2-3 crores every month from NRI investors.

My response to RIA challenge

I know there is lot of concern on how the business will evolve in light of the RIA regulations. There were lot of concerns around distribution business model even during the 2 years from 2013 to 2015 when I was trying to get my family comfortable with the thought of going full time into fund distribution. My thinking is simple: I know that I am adding a lot of value in my clients' lives by getting them to become SIP investors. And I know the market opportunity is huge - it is only a matter of how many people I am able to reach. If this is the case, why keep worrying about the future and sacrificing growth of today? I prefer to stay focused on today and on maximising growth today. I believe that as long as I am adding value to my clients, I will have a viable business - whichever way the regulations move.

I have set myself a target to reach 100 cr AuM by Sep 2017 and 200 cr by March 2019. Out of this 200 cr, I want 100 cr to come from the NRI market, which I am working seriously on. Today, by saving up from my earnings from the distribution business, I have created an equity fund portfolio in excess of Rs. 1 crore. My aim is that in 3 years, with a 200 cr AuM, I would have by then grown my personal investments to Rs. 3 crores. If in the next 3 years, I have a 200 cr AuM and a personal investment portfolio of Rs. 3 crores, I would anyway have secured my own retirement, if indeed I want to or need to retire. So, rather than worry about what will happen after 3 years when RIA may get enforced, is it not sensible for me to maximise my growth opportunities in the next 3 years so that I can face the future with confidence?

RIA is a draft paper right now. I have become a member of FIFA. FIFA is doing a great job representing the interests of distributors. Some time back Sanjaybhai Khatri came to Anand to talk to us and encourage us to join FIFA. I did that and I also learnt a lot from him on retail distribution, which I am implementing in my business. My belief is that there are distinguished and learned leaders in FIFA who are representing our interests. On a day to day basis, nothing is achieved by worrying about the future, but a lot can be achieved by making your own future. That's what I am focusing on doing.

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