Why this MFD is focusing on bottom of the pyramid

By Ravi Samalad |  23-06-21 | 

Born and bought up in Delhi, Vipin Madaan used to operate his automobile accessories manufacturing factory, which he started after his graduation. He was doing well for himself.

Vipin was looking to invest his money for his retirement. In the process, he discovered mutual funds. In 2005, he invested some lump sum amount in an equity fund through a bank. Five years later, he had some requirements for funds. He expected his portfolio would have grown by 15 or 20%. To his surprise, his portfolio had doubled in value. This piqued his interest and he started digging deep about mutual funds.

In 2011, Vipin was looking for an adviser to help him invest Rs 25,000 per month through SIP. He met many distributors/agents. Most of them coaxed him into buying ULIPs and endowment products by down-selling mutual funds. But Vipin was determined and convinced about the virtues of mutual funds. Unfortunately, Vipin could not find a distributor who would channelize his investments according to his risk appetite and goals. His close friend Rishabh Budhiraja recommended him to become a mutual fund distributor himself. Vipin heeded his advice. He kickstarted his mutual fund advisory practice by floating Dhanmantri Financial Services in 2015.

“Back in 2005, share markets were equated with risk and gambling. Even my father told me that I will lose money in mutual funds. I started searching about the pros and cons of mutual funds through newspapers. I started a SIP of 2,000 per month on my own. It found it to be a good product but not many people were aware of it,” recalls Vipin.

In 2011, Vipin and his wife Aarti were blessed with a baby girl. Vipin started building a portfolio to gift his daughter Yashika. Vipin is inculcating the habit of wealth creation to his daughter from an early age. “I gift her ten high dividend yield shares on her every birthday. Next year, I plan to gift Coal India shares. I have gifted her 10 ITC shares on every birthday for the last three years. This will teach her about the difference between assets and liabilities. She invests in a mutual fund with SIP of Rs 500 per month from her pocket money. I teach about investing to my other family members' kids as well. I gift an investment in Children Gift Fund for my niece’s birthday every year. On any anniversary or festival in my family, I make it a point to gift investments to my family members and friends rather than cash or other objects,” says Vipin. Vipin trains Yashika every day for ten minutes on how to achieve financial freedom.

Clientele

Vipin’s motto is to cater to clients who have never heard of mutual funds and help them be a part of the wealth creation process through equities. “I have many clients whose monthly earning is Rs 10,000 to Rs 15,000 per month working in the unorganised sector. They had invested only in bank fixed deposits. They had never heard about mutual funds. I spend a lot of time educating and handholding them. I have clients from factory workers, electricians, housemaids, loading vehicle drivers and so on,” says Vipin.

He gets a majority of his new clients through word of mouth. In fact, he gets 100 SIPs per month purely through references!

Retirement

When we think of retirement usually around the age of 40s or 50s. For Vipin, retirement planning starts even before a person starts earning. Interestingly, he has started retirement planning for six-month-old babies. “I take around Rs 1.5 – 2 lakh from college students. They don’t have any responsibilities at this age. The corpus is given either by them from savings or their parents. They don’t have to invest for their retirement when they even start working. Assuming a 25-year-old invests Rs 2 lakh lump sum which is not withdrawn for a period of 35 years can easily accumulate more than Rs 1.40 crore, assuming 13% CAGR.”

Interestingly, Vipin also starts a term plan for youngsters from the same capital. “The profits generated from the mutual fund investments are used to pay the term plan premium. The advantage is that you get good coverage at a modest premium since you are starting at an early age. So two of your major components (retirement corpus and securing your dependents through term plan) are taken care of at a young age,” explains Vipin.

SIP Drive

Vipin is an ardent believer in systematic investing. During the first phase of lockdown last year, he clocked 300 SIPs through BSE StAR MF platform. He has clocked numerous bulk SIPs in a single day over the last two years. Today, he has 1100 live SIPs.

“In the initial two years of my practice, I used to physical transactions. Subsequently, I moved online. It has become seamless.”

He is building a practice that can offer all products under one roof. They already offer direct equity, commodities, bonds and insurance. He offers a complimentary will writing service to all his clients.

Here are some of his achievements in registering bulk SIPs in a single day:

 Team

Vipin credits his team for his successful SIP drive. “They provide the back office and onboarding support so that the process is smooth. We have a team with diverse skill sets which helps the organisation,” says Vipin.

He has a team of six who look after different verticals of the business. His wife Aarti looks after the direct equity business while he is involved in business development and financial planning.

The Road Ahead

Vipin says that one should adapt and change according to time. This applies to their work, business and investments. “Earlier Fixed Deposits and Bonds yielded good returns. Now the returns have come down sharply. Thus, one should be open to exploring new products and avenues to beat inflation and generate wealth.”

Vipin aims to bring more investors from the unorganised workforce into the mutual fund fold. He is not bothered about the low-ticket size or revenues. He believes that a business has a strong foundation when it is built on a scalable model with a wider client base.

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