He became MFD at the age of 19 and now manages Rs 245 crore!

By Ravi Samalad |  11-01-22 | 

Rahul Sethia was introduced to the world of personal finance at a very young age. He took up mutual fund distribution during his college days when was just 19. His mother Hemlata Sethia and late father Ramesh Chandra Sethia were into post office distribution. Rahul decided to continue the legacy.

A majority of his clients are working professionals. His office is located in a remote location called Korba, which is 250 km from Raipur city in Chhattisgarh. Korba is the power capital of Chhattisgarh.

When Rahul entered the industry, most of the things which we today take for granted were carried out physically. Rahul takes us a trip down memory lane. “There was no R&T office. We had to send the form through courier to Raipur, which took three days to deliver. Where I operate currently, a courier office is still 15 kilometres away. Now, both CAMS and Karvy have set up their branch here. So things are smooth. I used to travel to Raipur (500 kms to -and-fro) to get account statements. Earlier, we used to collect post-dated cheques and then ECS was introduced.”

His entry into the market coincided with the 2005-07 bull run. The market crashed 50% in the 2008 global financial meltdown. The subsequent three years were tough for his business as clients had witnessed something unprecedented. But Rahul didn’t lose hope. He continued to educate his clients about the wonders of staying put during volatile times. Rahul says that clients who remained invested throughout this turbulent phase created sizeable wealth. This gave them an assurance that one can make money in equities if they stay the course and more importantly, invest during dips.

Creating sticky clients

Rahul believes in providing all-around services to his clients under one roof. He has appointed a full-time CA who helps in filing taxes for clients as a complimentary service. He also offers insurance, sub-broking, and other ancillary services which help him retain most of his clients.

He has a diverse mix of client base, right from investors who have just started their career to pensioners. “When I started the business majority of my clients’ age was 35. Now they are in the age group of 45-50. As companies were privatised during 2002, new power plants and smelter plants were set up in 2005 in this area. This helped me get young workforce.”

Today, his firm Investor Solutions caters to 1,800 clients, 2,300 SIPs and assets under advisory of Rs 245 crore in mutual funds.

Goal based investing

Rahul has been championing goal-based investing since early which has helped his clients meet their retirement and children's education goals through dedicated funds. “People tend to redeem from plain vanilla funds but when it comes to goal-oriented funds, there is a tendency to hold on to it as it reminds them of the goal for which they are investing,” observes Rahul.

Rahul also inculcated a habit of increasing the SIP commitment among his clients every year as their income increased. “I encouraged clients to set aside 50% of their monthly hike in existing or new SIPs. This has helped them a lot.”

Digital

He has been an early adopter of the industry’s Mutual Fund Utility platform. This helped him transition 80% of his transactions online. He is now able to cater to many of his existing clients who have shifted to different cities as part of their job postings. “I have reaped the benefit of this platform immensely in the last two years of lockdown. All transactions are carried out seamlessly no matter wherever I am. Out of 1800 clients, around 1,100 transact through MFU.”

Secret Sauce

Rahul spends at least 12 hours every day in his office. He believes two factors have helped him succeed, which are timely service and transparency. “Client complaints should be zero. If you procrastinate, your backlog increases. I make sure I close all client queries before I go home. Clients expect honesty and good service from any MFD/adviser. Mis-selling happens because people give unreasonable expectations to clients, in terms of returns or service. Setting the right expectations helps in the long run.”

Penny-wise pound-foolish

Rahul observes that investing through digital mode by bypassing distributors can cost the family substantial investments if the family is not kept in the loop. Rahul says that no matter which distributor/adviser you choose, keep all your finances with a single adviser so that your family does not have to run helter-skelter in case of any unfortunate eventuality.

He narrates an anecdote from his experience about a similar case. “One of my clients had invested through a bank eight years back and the family had no idea about it. I combed through the bank statements, SMS, emails, followed up with all AMCs to see if he had a folio. The client had invested Rs 12 lakh which had grown to Rs 32 lakh. His son stays in the U.S and had no idea about this investment. I helped them get hold of this money,” describes Rahul.

Rahul says that investors are attempting to save a few percentage points by investing directly but they don’t realise how much their family would lose even if a single folio or FD goes unnoticed by the family in case of the demise of the primary holder.

Need for the right advice

Talking about some of the recent trends in the industry, Rahul shares some food for thought for investors. “In the last 18 months, every stock/mutual fund has delivered. So millennials have assumed that making money in the market is easy. People are chasing past returns. Many first-time MF investors are investing in sector funds by looking at recent returns. Sometimes, these investors never come back to mutual funds if their expectations are not met. Investors tend to blame the industry and market after investing in unsuitable products. For instance, in their earlier avatar, ULIPs used to charge a high allocation charge. Companies/agents were churning money after a three-year lock-in period. Investors hardly earned anything even though the index doubled because the allocation charges were so high. This has been fixed now in ULIPs.”

Rahul has a team of four who help investors in this small-town work towards achieving their financial goals. His mother, Hemlata Sethia 65, is a constant encouragement as he comes to the office to lend a helping hand. “I’m very much satisfied with my profession as I get to show clients the right path to achieve financial freedom. At this stage, making money is not my priority,” says Rahul.

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Siddharth Jain
Jan 11 2022 11:57 PM
 Rahul is a very sincere, disciplined, knowledgeable in his approach since early days, I had known him since 17 years, and never ever have seen any other sincere person like him.
GURUDEV BARETH
Jan 11 2022 08:33 PM
 I knew Rahul since last 25 years when he was my student.
In had insured (lif insurance) me,my wife and son.The latter he has continued help me as a investor Advisor.
I am so proud Rahul
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