Mr. Sarfaraz Patel, Zonal Sales Head, NJ Group
Sarfaraz Patel is the Zonal Sales Head for South Gujarat, MP and Maharashtra (ex. Mumbai) with NJ Wealth. With more than 13+ years of experience in the financial services industry, Sarfaraz has proved to be a valuable contributor in shaping successful business in his territories.
A lot has changed in Mutual Fund Distribution Business over the last year or two. Below are a few points to highlight:
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Scheme Consolidation
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Upfront Commission Ban
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Removal of Contest like Foreign Tour
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Alignment of Trail Commission with AUM of Mutual Fund schemes.
Apparently lot of Mutual Fund Distributor seems confused or demotivated due to above changes. They are now doubtful about the prospects of the MF distribution business and are contemplating other businesses for their Future.
But NJ Partners are different and are looking for ways to tackle the above changes and Drive Future Growth.
This write up (titled NewStart) is an effort to guide Partners towards Growth in this New Era of Mutual Fund Distribution Business.
N = No to Negativity
E = Eagerness to Adapt & Adopt New Ideas
W = Wait (Patience)
S = Sell Concept, Not Product
T = Total Solution Provider
A = Acquire Lots of Clients
R = Reinvest in Business
T = Tools & Targets
Say “NO” to Negativity
First & for most Partners need to shut the Negativity about the viability of business coming from various sources like Media, Peers, Friends of Self.
Avoid Negative company & thoughts.
Mutual Fund Distribution is still a very attractive business and there are multiple reasons for the same.
Growth in Last 10 Years:
Equity MF AUM in June 2009 was 1.5 lakh crore. Now June 2009 was one of the worst period to be an MF Distributor. The Market had crashed from 21000 to 8500 (60%) and Entry Load was abolished hence drop in Upfront Commission from 5% (close-ended fund) to 0.5% (90% fall).
At that point in time, too many MF Distributors were demotivated, turned Negative and quit MF business. But since then Equity AUM of MF Industry has grown to 11.5 lac crore with a growth of 22% CAGR. In fact, an NJ Partner’s AUM has grown by 31% or 15 times in the last 10 Years. (NJ = average of NJ Partners) TotalMonthly Trail Brokerage distributed by NJ to its partners has grown by 38% in the last 5 years itself (5 times).
Future Growth:
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MFs in India are still Under Penetrated (2 Crore Unique Investors only) and Under-Represented (less than 50,000 active Distributors)
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Under Penetration & Under Representation presents a Big Big Opportunity for an MF Distributor going forward.
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India’s GDP to AUM Ratio is roughly 12% against 100% of developed countries like Australia & the USA. So we have a long way to go.
15 times AUM in coming 10 Years
To grow 15 times in coming 10 Years an NJ Partner needs to Focus on 1 simple parameter, the heart of our business- SIP.
By maintaining an AUM to LIVE SIP ratio of 1.5% an NJ Partner will grow his/her AUM by 18% every year & a 12% market growth will give Total 30% AUM growth to a Partner (15 times in 10 Years).
Eagerness to Adapt & Adopt New Ideas
Change is the only constant.
15 times AUM in 10 Years is possible but it is not going to be a cakewalk. Partner will have to Adapt as per the changing environment of the industry going forward. For example in the past 5 years Partners who understood & adapted Technology (E-Wealth Account) have grown faster.
Another thing Partners need to put in practice is to Adopt New Ideas. Doing same thing again and again will bring same result. If you want different results, you have to adopt New Ideas. Ideas that you may get from NJ Monthly Meets, NJ Partners, Other businesses, Unit Manager, etc. Don’t reject an idea without listening, understanding or putting in practice.
Wait (Patience)
MF Distribution business will perhaps come last if you arrange all businesses in chronological order of “getting instant success”. You simply can’t get overnight success in this business. The time needed to build a certain AUM will need to be given. Year-end AUM of a Partner over the last 16 years mentioned below is the classic example of Patience and Time in the business.
Start selling Concept
In this New Era to become Successful, I believe a Partner will have to stop selling Product and Start Focusing on Selling Concept.
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Instead of SIP, Sell Child’s Education, Retirement, etc.
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Instead of MARS, Sell Asset Allocation & its importance in Wealth Creation.
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Instead of Insurance, Sell Sampurna Suraksha.
Total Financial Advisor
Becoming Total Financial Advisor does not mean printing all financial products on the visiting card. Total Financial Advisor is Product-Neutral & Client’s Need Centric which I believe is very very difficult to implement but with practice can be achieved. Humans have biases, its in our nature. Similarly, Financial Advisor has biases towards financial products which we will have to remove to become Successful in this New Era.
So next time a client knocks on your door be product neutral and advice true to his/her needs, decide rationally where Rs.50,000 lying in his bank account should go (Liquid fund, Health insurance, Term Plan or MARS)
Acquire Lots of Clients
AUM is directly proportionate to a number of clients you manage. A simple back of the envelope calculation is that you need 664 clients with a SIP of Rs.5,000 to reach an AUM of 100 Crore in 10 Years.
Knowledge, Infrastructure, Category of clients matter but the most important variable is Number of Clients, in this case, 664. I am sure total of your mobile contacts & Facebook friends will be much more than 664. If not there are many ways & activities to acquire clients.
But the client you must acquire and Lots of it!!!
Reinvest
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To acquire clients you will need time and for that, you will have to free yourself from non-productive but important tasks.
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Reinvest earning from the business to buy people’s time.
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Invest in Technology, Infrastructure, Marketing, Branding, Support Staff, Sales Employees, etc.
Tools & Target
Tools: A Carpenter or a Plumber performing his/her task without Tools will be in-effective & in-efficient.
Similarly, there are many tools that you can use to improve your productivity and efficiency. Use them.
Be it E-Wealth account, CRM, Automated Investment Solutions, Partner Desk, Bizmall, Family Need Utility, Portfolio Review Utility, Mobile Apps, etc.
Target: Imagine a Football match without Goal Post. Hence set Goals/Targets for your business. Goals like the number of clients, AUM, Insurance book, Revenue, etc