After over a decade long career in sales, Santosh Joseph decided to strike out on his own by floating Germinate Wealth Solutions in September 2016. In less than three years, Santosh and his team have built assets under management of Rs 100 crore in mutual funds. Interestingly, majority of his clients are first-time mutual fund investors. He chats with Ravi Samalad about how his team achieved this feat.
You worked with an asset management firm in sales. What made you don the hat of a financial adviser?
I have been in this industry since 2003. I have been interacting with financial adviser community for a large part of my career. I wanted to move to the other side of advising and managing people’s wealth after I saw significant gaps. The opportunity was never in question. We started to focus on new customers segments which are untapped. The fact that we have a low single digit penetration of mutual funds in the country and the incredible product that mutual funds are drew me in to take these products to the untapped market.
More than 90% of your clients are first-time mutual fund investors. How did you go about tapping this segment?
We set out on our initial goal to reach out to many people without exposure or awareness to mutual funds and needed professional help to invest. We sensed this as the big opportunity and started from the ground level of reaching out to our natural market of friends, family and relatives. The word spread fast. Our focus to help new investors to get comfortable to start investing in mutual funds was well appreciated.
What are the expectations of first-time mutual fund investors and how do you address them?
They are cautious. They need help with understanding the product, aspects related to service and the ability to execute transactions. We bridge this knowledge and trust gap by spending time explaining and hand holding investors make the move towards mutual funds.
You started your practice in September 2016. Your SIP book has crossed Rs 1 crore monthly in less than 30 months! How did your team achieve this feat?
Yes, the team deserves this appreciation! We are a team of five. We did our best. We crossed Rs 1 crore SIP book within 27 months because we were relentless in our focus to add new clients. We had to help many young investors apply for Permanent Account Number (PAN) and get other necessary documents ready to complete their Know Your Customer (KYC). We constantly followed up with clients to ensure they signed up.
Your AUM has grown from Rs 7 crore in FY16-17 to almost Rs 100 crore as of now. What has been your success mantra?
We are always looking for niche marketing activities to engage with investors and also to help our existing investors help us refer their friends and relatives. We do specific events around clients’ professions and careers to relate to them. This has helped us expand our client base. We thank God this growth has come! We are praying for more so that we are able to make an impact on the society by helping them channelize savings towards mutual funds.
Why did you choose to subscribe to Morningstar Advisor Workstation even before starting your business? How has it helped you in research and in client acquisition?
I was aware of Morningstar Advisor Workstation before I started my practice. I was sure that when I started, I would be using the AWS to ensure our clients get the best independent research and analysis. We have always believed that our clients are our greatest assets. Thus, we didn’t want to compromise on our offering to them. The AWS also helps us focus on sales and services part of the practice.
Startup advisers usually need to cover their costs and hence opt for a combination of upfront + trail. You started with all-trail model since inception. Did you bring in some seed capital? How important is it for distributors to invest in their business?
We all did bring in seed capital to setup the business and establish systems, efficient service and a comfortable office for our clients to visit us. We were very clear about keeping client first in all our calculations and choose the full trail model so that we were intrinsically aligned with client goals and the long-term nature of this practice. The entire team went without pay for the initial 18 months to help us turn around quicker.
How are you coping with the shrinking margins? How are you diversifying your sources of revenues?
We have been largely immune to this due to our all trail model and new investor additions. We feel that the growth potential this industry offers can offset shrinking margins. We do recommend Portfolio Management Services (PMS), Alternative Investment Fund (AIFs) that are appropriate for investors risk appetite. But this is largely offered as a value add rather than as a means to diversify revenues.
How are you adopting technology in your practice?
This is a people centric business and technology acts as an enabler. We have invested in customer relationship management (CRM) tools to report and manage portfolios. The experience that clients need is a combination of technology and timely services. We have ensured that the clients have on demand access and also efficient service. We are currently testing our in-house developed portal to making investing paperless and convenient to investors. This should help us give our existing clients a better experience and onboard new clients even faster.
What would be your advice to new distributors joining the industry?
The opportunity is huge for new distributors as well as for existing distributors. We all need to find an effective way to reach out to investors and make a difference for them. This approach will drive growth of the industry and distributors. We believe ‘Mutual Funds Sahi Hai’ campaign is yet to reach its full potential.
