Clad in a suit, Satish Kumar Pandey is busy answering client queries regarding the Budget 2020 from his cabin. You will not find him giving soundbites to media or sharing his success mantra at any adviser conference. Rather, he prefers to focus on his business. Hailing from small town Varanasi, Satish worked his way up to establish himself in his corporate career and as an entrepreneur.
Early Life
After graduating from Banaras Hindu University from Varanasi in 1995, Satish pursued post-graduation in Finance from Lucknow University. Satish’s interest was always in finance which led to join the shares division of Grasim Industries.
The Launch Pad
Satish realised that he is not cut out for working from a cubicle. Instead, he wished to be on the field to get practical experience. This is when he found his calling. He moved to Delhi where he joined RR Investor Capital Services. He combined his skill for marketing and passion for finance to chart a career in financial advisory.
His entry in advisory coincided with the tech bubble in 2002. The turmoil in markets had dented investor sentiment and Satish had the difficult job of canvassing mutual funds. But it turned out to be a blessing in disguise. This opportunity offered a perfect ground for him to learn and build rapport with clients. He was able to nudge his clients to enter markets in the aftermath of tech bubble, when most investors waited on the sidelines.
In the first two years of his job, Satish nurtured 100 clients. “The NAVs of certain schemes had fallen as low as Rs 2-5. Investors were wary of mutual funds. I recommended clients to invest in these funds to average out their investments. Some clients agreed and earned handsome returns when the tide turned. They are still my clients,” recalls Satish from his compact office in Mumbai’s Nariman Point.
When Satish entered the industry, the equity asset base was Rs 27,000 crore. Satish had the foresight of the industry’s growth prospects. Through his decade long stint with the firm, Satish rose through the ranks and headed company’s different divisions.
After establishing RR Finance’s presence in Delhi, he was tasked with establishing its footprint in Mumbai. Satish spearheaded the set up of Mumbai office.
Turning Point
Satish realised that he needs to reinvent himself to take him to the next level in his career trajectory. By taking a sabbatical of two years, he earned a management course from IIM Lucknow. “The classes started from 7.30 am. It was a great opportunity to learn and get inspired from my professor Ranjan Das. We used to have very intellectually stimulating discussions while networking. My professor inspired me to strike out on my own. After joining my job again, it took me three years to venture out on my own,” says Satish.
Satish had a legacy of his trusted clients who were happy to trust their money with him in his entrepreneurial journey. In the first year of starting his firm Imperial Investment Consultancy, he built an AUM of Rs 200 crore which ballooned to Rs 500 crore in the third year. Raj Kapoor, former head of Citibank’s private banking, had put in seed capital in this firm. Raj was instrumental in setting the company’s vision and business model which is testimony to the growth of the organisation so far.
The Ups and Downs
The introduction of direct plans came as a roadblock. Since he had a client who had invested in regular plans of certain debt funds, the client decided to bypass to save costs. Overnight, the client redeemed Rs 250 crore. Direct plans appeared like the end of the world for many distributors. Even distributors catering to retail clients were worried. However, Satish didn’t lose hope.
His years of experience in markets thought him to remain focused by taking things in his stride. He rebuilt his business with a focus on equity funds. Today, his firm manages Rs 500 core in mutual funds, 90% of which comprises equity assets. His 10,000 clientele consists of mainly high net worth individuals.
Diversification
His firm provides a bouquet of products like perpetual bonds, tax-free bonds, corporate bonds, corporate FDs, PMS and AIF. This ensures that his firm’s revenues are diversified, offsetting the adverse impact of dip in mutual fund commissions. “Tax-free and perpetual bonds have been a hit among people falling in the highest tax bracket of 42.7%. We have mobilised decent chunk of money in such bonds in the past three years,” says Satish.
Besides mutual funds, his firm manages more than Rs 2,000 crore across other products like PMS, AIF and bonds.
Power of SWP
Satish has been recommending his big-ticket clients seeking regular cash flows to opt for systematic withdrawal plans for a period of 3-5 years. Many of his clients have received regular income and their value of initial investment today exceeds the cost value by a decent margin, even after getting three years of regular cash flows through SWPs. He recommends withdrawing, depending on the need of the client, up to 9% of the initial lumpsum amount, to avoid exit loads. This strategy has worked well for most of his clients.
Brand Building
With world’s major economies experiencing sluggish growth, India is in a bright spot and could get good foreign flows, believes Satish. To capitalise on growing appetite for Indian equities, Satish has floated Imperial USA LLC incorporated in New Jersey with a partner who is Certified Public Accountant (CPA). This firm will channelize Indian NRIs money in Indian offshore products like AIFs and PMS.
As a brand building exercise, Satish and his partner recently sponsored US Open cricket team which cost them $ 10,000. This event, which is also officially sanctioned by the ICC, and is run by Cricket Council USA, gives American players an opportunity to play against world-class competition in a tournament that features players from across the United States and around the world playing in 28 different teams. The matches were held during December 18-23, 2019 at the Central Broward Regional Park Stadium in Fort Lauderdale, Florida. “Around 16,000 people watched us which was a great way to promote our brand,” says Satish.
Outsourcing Investment Management
With the growing popularity of direct plans, Satish figured it is best to offer his HNI clients what they want. He discovered Morningstar’s Managed Portfolios, a PMS fund of fund investing in direct mutual funds, an ideal vehicle to invest his clients large ticket investments. Satish has put in Rs 10 crore in Morningstar Managed Portfolios.
“Today, high net worth clients want to invest in direct plans. An adviser might be limited by his individual capacity to build, monitor and rebalance large ticket investments independently. It requires time, resource and research. It is best if advisers focus on their competency which is growing business/meeting clients and outsourcing investment management to professionals. Morningstar is independent. There is no bias while selecting underlying funds. The approach is process driven, objective, rational and backed by the firm’s decades of experience in investing. Their access to data, research and in-depth knowledge on markets and mutual funds gives me the conviction. I plan to channelize Rs 500 crore in this product over the next few years,” says Satish.
Road Ahead
His vision is clear – focus on his competencies, invest in the business and grow the business by diversifying across products.
Not many know that he has a minority stake in an upcoming AMC which is in the process of getting SEBI approval.
Satish’s success story is a shining example of how thinking big, remaining focused and investing in the business are essential for succeeding in today’s environment, where technology, changing client expectations and fintech are rewriting the rules of the game.