MARS & The Art of Building MF Business

MARS AUM has recently crossed Rs. 5000 Cr milestone with the trust of more than 1.20 lac investors. We have always been showcasing how investing in MARS has resulted in better risk adjusted returns for investors across different portfolios. But how has it impacted the business of Partners who are selling MARS? Has their business grown faster, have they been able to acquire more clients? What better way to find out answers to these questions than looking into some data.

We did an analysis of business of Partners who are selling MARS fervently and partners who have chosen not to promote MARS. We took top 50 partners in both categories and compared their business performance over the last financial year. For MARS Group, we took top partners who did highest net sales in MARS Portfolios in FY 19-20. And for Non MARS group, we took top partners by AUM at the beginning of FY 20 who have done 0 MARS sales in the entire financial year. To ensure that the data is comparable and not skewed by outperformance of some partners, we made some ground rules.

Rules for Partner selection for the study

1) Partners below 10 Cr AUM and partners above 200 Cr AUM at the beginning of FY 20 were not considered.

2) Only Partners who have started their business on or before 1 Apr 2018 were considered.

3) Based on the above 2 criteria, MARS partners were shortlisted in descending order of MARS Net Sales for FY 20. Non MARS partners were shortlisted based on descending AUM as at the start of FY 20

4) 50 Partners were considered in both the categories.

Partner Profile for the study

The average age of both the categories of partners in NJ was more than 11 years. So, all our 100 partners were a highly experienced lot. The average AUM for both the categories was 62 Cr for MARS group and 65 Cr for Non MARS Group, with Equity AUM being 52 Cr and 57 Cr for both categories at the start of last Financial Year. Also, both categories had a decent SIP book of 50 Lac + and large client base. That way, there was almost an Equal balance in both categories across all parameters.

So, How did they fare in this comparison. We take a look at 3 business aspects. Change in AUM in the year, Net new clients acquired and Net Equity Sales done last year.

AUM

While markets fell sharply in the month of March 2020, almost 40% from peak levels the AUM for both the categories of partners also fell. The Equity AUM of Non MARS group fell by 21% in 1 year from Mar 19 to Mar 20. However, the fall in Equity AUM of MARS Group was only 11%, almost half the fall of Non MARS group.

Add to that when markets have bounced back and risen sharply in last 3 months, the AUM of Non MARS group went up by 18% while that of MARS group went up by 24%! Meaning by, when it fell, it fell less, when it went up, it went up higher.

Due to this low fall and high rise, the Equity AUM as on 30 June of MARS group is 10% higher than what it was in Mar 19, while even after the rebound the AUM of Non MARS Group is still 7% lower than Mar 19 levels. So, if both started at AUM of 100 last year, MPs are at 110, NMPs are far behind at 93. On a scale of 60 Cr AUM, this translates to 66 Cr and 56 Cr, a wide gap of 10 Cr directly impacting their incomes in similar proportions.

Client Acquisition

While both set of Partners could not add significant new clients last year. Still, partners in MARS group was able to add 23 new clients on an average last year, compared to 9 new clients added by partners in Non MARS Group. Though, the lead is slender, still MARS group had an advantage of adding 14 more clients in the year.

But more than client acquisition, MARS Group was more focussed on bringing their clients online. They were already leading Non MARS group in opening new EWA in FY 19, but this trend only accelerated in FY 20.

This digital adoption automatically helped the MPs in the lockdown period, the results of which can be seen in the Net Sales numbers.

Net Sales

MARS group did an avg of 8.2 cr of Net Sales in MARS, the Non MARS group however, did not sell MARS and their MARS sales was zero. But if we look at overall Net Equity sales numbers of both categories an interesting trend emerges.

Sales figures in Rs. Cr.

As can be seen from the table, while the Net Equity Sales of Non MARS Group declined by 42% to 3.96 cr from 6.80 Cr in FY 19, Net Equity Sales of MARS group actually grew by 11% to 8.30 cr. Comparatively, MARS partners Net Sales was 110% higher compared to 10% higher a year ago then Non MARS Partners. A sharp jump only in a span of 1 year.

Interestingly, during the lockdown phase, while Non MARS Group partners are clearly struggling for business with hardly 0.10 cr of Net Sales in 3 months despite having a monthly SIP book of 50 Lac+, MARS group has generated 2.5 cr fresh Equity sales in last 3 months. This might be on the back of higher digital outreach and high EWAs opened in last 2 years yielding results. Of course low volatility in the portfolios, esp dynamic, has also helped in bringing in fresh money from investors, along with change of Asset Allocation.

Conclusion

MARS Partners have performed handsomely by a wide margin than partners who do not promote MARS. MARS adoption has not only resulted in higher Net Sales, it has also resulted in comparatively higher income, considering AUM numbers. MARS not only results in peace of mind for investors but is having a meaningfully strong impact on business of the partners promoting it too.

There are however many more things which can not be quantified such as time saved by partners in researching schemes or managing asset allocation of clients themselves. And when clients are less worried about their investments, partners are in a much better positive frame of mind. Much more open to talk to new investors, getting more references and fresh business from happy investors and most importantly sharing the extra quality time with friends and family. Happy MARS Selling.

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Contributed by: Mr. Husaini Kanchwala, Head - Investments. NJ Group.