How Vatsal Shah from Sushil Finance built 500 crore AUA
Mumbai based Vatsal Shah joined his father s stock broking business after completing his engineering in 2007. Founded by his father Sushil Shah in 1982, Sushil Finance today has 600 plus franchises across India with 1.40 lakh clients.
While the company s predominant focus has been broking, volatility and the shift in investor behavior prompted Vatsal to foray into mutual funds since 2009. Investors come for the flavour, and fun of trading in markets for a few months and become inactive later. Also, retail investors don t like volatility. We therefore started focusing on mutual funds, which offer a far superior alternative to participate in markets. It is a win-win for our company and investors alike. As investors benefit from long term growth in the market, we get a regular stream of income says Vatsal.
The result Vatsal has built an AUA of Rs. 500 crore in mutual funds across 25,000 clients. His MF business has grown three times in the last two years he says. So how did Vatsal acquire such a large clientele? He used a multi-pronged approach to grow his MF business. At the time he ventured into MFs, Vatsal didn t observe much meaningful differentiation in the services offered by many distributors. We wanted to add value. Thus, we introduced a product called Wealth Winner which recommends the level of exposure clients should have in equity and debt at various points of time based on a combination of fundamental and technical factors. This product was received well by investors.
Other than specialized products, technology has helped Vatsal achieve scale. We evaluated different platforms and found the exchange route to be the best. After using different platforms we found that the volumes were growing faster on the exchange platform, says Vatsal. The exchange platform allows him to execute bulk transactions at one go. Imagine how difficult would it be if we were to inform 100 clients to switch from equity to debt or to make fresh investment. The exchange platform helps us execute transactions faster without the hassle of filling up forms, he adds.
With the help of technology, Vatsal tapped his franchise to grow his MF business. We undertook a massive campaign to train our sub-brokers. We explained the stability of income in mutual funds vis- -vis broking income which is sporadic, says Vatsal. His objective was to activate more and more franchises to sell mutual funds.
Besides his franchise, Vatsal has started organizing financial planning seminars in companies to expand his clientele. We have started organizing seminars in companies where we explain the benefits of mutual funds. The conversion ratio is low but we are hopeful that this strategy will pay off in future.
Vatsal believes that the MF category will gain more popularity as investors, especially those who prefer traditional fixed return products, start looking for better returns. As the FD rates become unattractive, mutual funds will emerge as a big category going forward, believes Vatsal.
As the client base grows, making sure that each client gets the same level of attention and service is important. With a clientele of 25,000, Vatsal says that servicing them is a task. Communication is a challenge sometimes. We send reports on emails every month but some clients don t check their mails regularly, says Vatsal. To make portfolios easily accessible, Vatsal has also started sending portfolio valuation to all his clients through SMS. He is also working on a software which will offer a consolidated view of investors portfolio across all products.
An MBA from Indian School of Business, Hyderabad, Vatsal wants his company to be known for its research capabilities. He follows an algorithmic model for recommending funds to his sub-brokers. Firstly, we look at the risk- adjusted returns of funds. Secondly, we look at the normalized returns and thirdly we compare the point-to-point returns of a fund in the last eight quarters with the returns of Nifty. After filtering the best funds we prepare a list of recommended schemes.
Vatsal is among the growing breed of brokers who see a potential in mutual funds. He aspires to reach Rs. 1,000 crore in equity assets in the next five years. With his large franchise base, technological strength and differentiated services, Vatsal is confident that he will turn his dream into a reality soon.
Not able to understand routing of MF investment through stock exchanges. If you think it is fast and hassle free, then, I think you are wrong. In both the cases, you have to do KYC once when you open an account. After that, the transaction is completed is less than 30 seconds. In case of dealing through stock exchanges, you have to pay brokerage also.
Does it mean that Sushil Finance gets a part of the brokerage (since they are originally stock brokers) and also a commission from MF AMC.
If they are not getting or interested in brokerage, then, why they are not switching to a common aggregators platform like MFU or some such platforms.
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