‘I aim to buy my Rolls Royce before I turn 50’

In association with ICICI Prudential, we chronicle the journey of Mumbai-based adviser Gajendra Kothari of Etica Wealth Management.
By Morningstar |  24-09-18 | 

While Gajendra Kothari could have taken the reins of his 50-year old established family venture, he chose to chart his independent path.

Gajendra vividly remembers his first job with UTI MF. “I met a lot of small and medium enterprises, or, SMEs, to sell them liquid funds. A lot of investors used to seek my advice after they had burnt their fingers by investing in other products,” recalls Gajendra.

At UTI, Gajendra rose to the ranks of vice president of products for UTI’s PMS division. He was subsequently posted at London to head business development in UK and European markets for a span of three years.

His interactions with clients revealed that many of them were mis-sold insurance-cum-investment products. He saw a huge lacuna of quality financial advisers who could work in the interest of clients. With Chartered Financial Analyst (CFA) under his belt, Gajendra says he could have become a fund manager, but he found his calling in coaching investors.

Before taking the entrepreneurial plunge, he decided to gain some more experience which would help him in his business. In 2010, he quit his job and floated his advisory firm Etica (Spanish-Portuguese word for ethics) Wealth.

Today, he has offices in Assam, New Delhi, Kolkata and Mumbai. His brother Virendra helms the Assam branch while Nikhil looks after client service in Mumbai. Gajendra is happy that he chased his dream.

Watch the Facebook Live interview here.

 Investor Education

Gajendra conducted his first IAP in his hometown Jorhat, a city in northern Assam. Attended by 550 people for five hours, it was a massive success. Gajendra spoke about the importance of liquid funds for businessmen, saving for children’s education and retirement planning in a language they could relate to. He got 65 SIPs from this event.

Encouraged by the success, Gajendra started conducting IAPs for a varied group of professionals and corporates. The IAPs are tailored according to the audience, which run from four hours to full day. Now, he delivers IAPs at a reasonable cost to educational institutions, corporates or even free of cost for a good cause. “Not many IFAs charge fee for conducting IAPs. If you charge fee, the hosts know that they will get quality. It is taken seriously. Also, our time and effort are compensated even if we don’t get clients. If we get clients, then it is a bonus. We contact prospects only if they have given their consent in feedback form,” says Gajendra.

Gajendra says that the content of the workshop has to be engaging to hold audience attention. He usually speaks on behavioral finance topics which people are able to relate to. His trademark pitch is sharing his own example of how he has been saving for his family by showing his account statements. Seeing his personal investments and policies convinces audience that he puts his money where his mouth is.

Further, he conducts one large format IAP annually where he invites experts from the industry to engage in a freewheeling discussion with clients. The videos of IAPs are uploaded on You Tube, which are a big draw among people.

So far, Gajendra and his team have conducted more than 200 training sessions in the areas of personal finance, mutual funds, insurance etc. at SEBI Regional seminars, BSE, Inter-Connected Stock Exchange, Institute of Chartered Accountants of India (ICAI), and at various B-schools, colleges and corporate houses in the country. Currently, his team conducts ten investor awareness workshops every month.

Media strategy

He is a regular face in media – be it newspapers or television shows. “Being on television channels and newspapers helps build rapport. We don’t get new business immediately, but our clients are happy to see us on television,” says Gajendra.

For advisers who wish to have a presence in media, he recommends them to start with a blog and promote it on social media. If the posts are liked by journalists, chances are they might reach out to you for quotes. Once contacts are established, Gajendra says that IFAs should share guest articles with newspapers or online personal finance portals. He says that IFAs should look at it as a brand building exercise and not necessarily a client acquisition strategy.

Winning clients

Gajendra enjoys a high conversion ratio. Of ten prospects he meets, eight become his clients.

When asked about his secret sauce, he says, “Mutual funds are too good for someone to turn down. If you explain well, the client will convert. You are there to change his life in a positive way. We don’t talk about products or our company. We just talk about their life goals. We do a thorough research about clients before meeting them. Seeing is believing. Sometimes, just talking may not be enough. We show prospects a lot of infographics and charts will explain our point of view,” explains Gajendra.

Registered Investment Adviser

Besides distribution, Gajendra’s firm is also a Registered Investment Adviser with SEBI. During the initial client meetings, he shares with clients his revenue model (RIA and distribution) and asks them to chose either. Gajendra has been charging fees since 2010, when the RIA model did not exist. Most of his clients have had no problem paying fee.

“What clients look for is transparency. We give them them both options – to invest in direct plans and pay fee or invest through regular plans. The problem is not charging fee but the mechanism to collect it. It may not be feasible for clients to draw a cheque every quarter or semi-annually. There should be a mechanism to auto debit fees from clients. Platforms would be able to solve this issue,” says Gajendra.

Technology

Gajendra has adopted technology to his advantage right from the inception of his practice. For his instance, he always carries his iPad in client meetings, which is stored with all the infographics and charts to make a case for investing. Currently, his office is 80% paperless and hopes that one day it will be completely paperless. To achieve this, he has earmarked to invest 5% of his net profit on technology annually.

Gajendra has been actively using both BSE StAR MF and NSE MF II to execute client transaction since 2014. Needles to say, this has helped him acquire clients spanning geographies at a low cost and scale up tremendously. Interestingly, 100% of his client transactions happen online! No wonder he has built assets under advisory of Rs 450 crore in mutual funds in just eight years.

To find his best fit, he keeps experimenting with every new software. Also, he believes exchanging ideas with peers is a great way to learn about new technology. Gajendra says that financial advisers today have a lot of options to take care of their transaction execution capabilities, back office, CRM and research at a reasonable cost. However, he still looks forward to a day when a single software could take care of all his needs – back office, CRM, transaction execution and research.

He believes that financial advisers should ideally subscribe to a third-party technology provider rather than building their proprietary tool as this would allow them to focus on their core strength, which is business development and meeting clients.

He is not perturbed by the onslaught of robo advisers. While he does feel that robos will help expand the industry, the need for a human touch will be always needed. He advises IFAs to use and collaborate with technology providers to provide the best for clients. He says that the future belongs to bionic advisers.

Investing in business

A meeting with the CEO of an AMC made him realize the immense potential in store for wealth managers. The CEO told him that the industry will see an influx of investors and advisers need to be be equipped to handle them. This meeting nudged him to start investing in his business heavily.

Gajendra immediately decided to move his office from Andheri to Churchgate. Concurrently, he also expanded his team by hiring relationship managers. The investment started paying off as his business kept expanding. He felt that his second office too was not enough to accommodate his growing team which led him to move to his third office, a 1,600 sq. ft office in Merchant Chambers.

“Many IFAs operate as one man show. You need to be open to taking risks.  Your clients wont trust you if you don’t invest in your own business. We tell clients to invest in their future but are we investing in our future? You need to invest to build the right team and infrastructure,” asserts Gajendra.

In the not-too-distant future, Gajendra envisions having an army of 100 relationship managers who would be equipped with a technology which would double up as their virtual office. The RMs would meet clients and perform all tasks on the software, without requiring to be present in office. He believes standardizing processes will help cut time and build scale.

With three offices up and running, Gajendra is looking to further expand company’s physical reach by opening branch offices in Surat, Bengaluru and more locations within Mumbai.

Infrastructure

His new office exudes a feeling of safety, comfort, diligence, and competence, with several meeting rooms and ample work space. It has all the conducive elements to help clients make the right financial decisions. “When it comes to financial planning, we have nothing tangible to show. We are selling dreams. To help clients visualize and inspired, we have created different piggy banks with goals (retirement, education, etc.) embossed on them. I also have a dye cast model of Rolls-Royce in my cabin which I intend to buy before 50. It pushes me to do my best. My clients see them and are inspired to commit more investment than they had initially planned to meet their goals,” says Gajendra.

Grooming staff

Gajendra believes that training and development of employees is pivotal for an organization to retain talent and boost productivity. “I found that multinational firms spend a lot of energy in training and development of their employees. Investing in knowledge is the right fuel. In the last ten months, we have had 50 session with the family members of all our employees to apprise about what we do and the importance of planning,” says Gajendra.

Gajendra is now training his team on the art of conducting IAPs so that he is not required to be at multiple locations.

When asked if he is worried that his team could someday start their own advisory firm, Gajendra says that he encourages his team to think like entrepreneurs. “I would be very happy if they start their own firm. In fact, they can take the clients too if they have a good rapport with them. Having an entrepreneurial mindset allows my team to give their best,” says Gajendra.

Looking ahead

Notwithstanding the challenges, he believes the next ten years present a golden opportunity for advisers.

Personally, he aims to buy his Rolls-Royce before he turns 50 and wants to accumulate a corpus of Rs 100 crore for his retirement by investing in mutual funds. “If you haven’t been able to create wealth for yourself then can you be a role model for your clients?” he asks.

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