Adviser Perspectives: Investors need handholding during volatile times

By Ravi Samalad |  15-06-22 | 

After his graduation, Ravi Shankar Agarwal joined his family’s business of nut and bolt manufacturing. After a short stint, Ravi realised that he wanted to explore a new career that closely aligned with his passion. His quest to carve out his independent career led him to look at other avenues. Shifting gears, he joined his brother Raj Kumar Agarwal’s Chartered Accountancy firm in 2002.

A representative from a private insurance office met Ravi and encourage him to explore a career as an insurance agent.  Ravi obliged and started learning about the insurance industry and its prospects. He observed that the penetration of insurance was abysmal, and this could be a good opportunity.

Over the years, he built his client base from scratch. Sensing the need to expand his product offering, he ventured into stock broking by taking up a sub-broking license in Kolkata. Ravi realised that not all kinds of investors had the inclination to invest in stocks and mutual funds offered a much better experience to retail investors with their expertise in fund management with a relatively lower risk.

Mutual fund foray

In 2008, he decided to venture into mutual fund distribution. His entry into mutual funds coincided with the biggest meltdown in financial markets, which shattered the confidence of many investors. Nevertheless, he continued to promote Systematic Investment Plans (SIPs) as a way of entering the market.

“It was a tough time for me because the stock broking business suffered a roadblock due to the financial crisis of 2008-09. Mutual funds were new to me. I had a good rapport with clients, so I started meeting clients and convincing them to invest small sums through SIPs. Since then, there has been no looking back. Our SIP book currently stands at Rs 75 lakh and we hope to scale it up further,” recalls Ravi.

In 2013, Ravi joined Business Network International (BNI), a business networking platform, which helped him expand his social circle and get more referrals.  Fast forward to today, his assets under management in mutual funds has reached Rs 150 crore. His firm Swaraj Shares and Securities, which operates from Kolkata, has a team of six who collectively cater to more than 450 clients. Ravi says that being in touch with clients has helped him gain their trust. He calls or tries to meet each client at least once a quarter.

Risk mitigation

While his firm also offers direct equity, his predominant focus is mutual funds. After closely witnessing the ups and downs of different market cycles, Ravi realised that risk mitigation is more important than chasing return. While selecting schemes for clients, Ravi prefers schemes that are managed by fund managers who have more than ten years of experience in managing funds and have seen different market cycles. He also looks at quantitative filters such as consistency of scheme performance and downside protection. “We generally don’t recommend very aggressive equity funds. While fund selection depends on client risk profile, we prefer to opt for funds which have higher downside protection,” says Ravi.

Advice for budding investors

Ravi says that those who want to dabble in stocks can split their corpus into two funds – one for trading and another one for long-term investing.

“You don’t need to earn a lot of money to save. Save whatever little you can from your source of income. Direct equity is good for people who can understand companies and the market and can devote time to track their investments. For others, it is advisable that they invest via mutual funds.”

Adviser alpha

Despite the growing popularity of DIY investing apps/websites, Ravi believes that investors need handholding, and advisers/mutual fund distributors will continue to play a crucial role in helping clients navigate volatility and build long-term wealth. “Many investors who had switched to direct plans to save on the brokerage cost hit the panic button and exited in the 2020 market crash. They are coming back to us to build their portfolios. Distributors need to showcase that they can help them generate alpha and more importantly, prevent them from making wrong investment decisions,” says Ravi.

Ravi says that investors base their investment decisions more on emotions and trends. “They invest more during a bull run and shy away from investing in a bear phase. This is where we can guide them to make rational decisions and more than compensate them from succumbing to their self-destructive behaviour if they had invested without any advice in direct plans.”

He observes that while the awareness about mutual funds and equities has increased, the penetration of equities/mutual funds is still lower as compared to developed markets.  He believes mutual funds will only grow in popularity in the days to come and distributors/advisers need to be equipped to cash in on this trend. Going ahead, Ravi wants to ride on the digital wave by building a robust website, mobile application and increase his presence on social media to engage with millennials.

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