02nd Sep 2012

Dhiraj Mittal has scaled an AuM of 300 crs (200 crs in MF AuM, 100 cr in other assets) and is busy putting together the roadmap to double his AuM over the next 3 years. What makes Prime Capital so successful in such a difficult market? Three critical success factors, we believe, have helped him reach this level and will continue to catalyse his growth in the years ahead :

Segmentation : He knows exactly which kind of clients he seeks and which kind of clients are not welcome

Proposition : He has a very clear customer proposition that he offers to these target clients, and makes sure he has the necessary expertise to deliver - he is a Chartered Accountant and a Certified Financial Planner

Execution : Flawless execution of what he promises - month after month. Execution of mandates is the number one priority in his firm - new business automatically follows.

Read on to understand more about how Dhiraj has scaled up so well and why we believe he has the wherewithal to continue scaling up and reaching newer milestones.

WF : What prompted you to move away from traditional CA work and into the financial advisory space?

Dhiraj : Lack of qualified professionals in the financial services industry, easier scalability and better revenues.

WF : When you began Prime Capital in 1994, what was your proposition and your products - given that financial planning was completely unknown in India and mutual funds were equally unknown? How did your proposition change over the years?

Dhiraj : We started with Stock broking wherein we focussed on listed bonds/mutual fund schemes quoting at huge discount to the intrinsic value/NAV like the IFCI debentures, Morgan Stanley growth fund, Taurus starshare etc. In 2003, we realized that wealth management and mutual funds is a better place to be in, started advising on mutual funds in 2004.

WF : What prompted you to take up the CFP certification in the early days of its history in India - when the concept was still very new in our country?

Dhiraj : Did a lot of research on how the wealth management industry works across the globe and realized that to reach the top, one needs a relevant professional qualification which is recognized across the globe and also give the proper perspective. Further, it generated better confidence among the clients and the prospects. Though, because of the CA degree, the clients and the prospects always had a high level of confidence in us, CFP certification improved the same, especially among the NRI clients. Also, I firmly believe that any professional degree always improves ones knowledge and performance.

WF : From a client's point of view, does the CFP certification add value - in their eyes? Or is it the individual alone who makes the difference and not the qualifications and accreditations?

Dhiraj : When a client comes to you for the first time, its these professional degrees that gives her the comfort to give the business in the first place. Also, my experience is that a qualified professional is more likely to work professionally than an unqualified person.

WF : What is the customer proposition you offer today to your clients?

Dhiraj : Disciplined management of their money in line with the mandate given to us for the smooth achievement of their financial goals. Also, we ensure that we put the clients' money in the most consistent and tax efficient investments to enable them to live the lifestyle of their dreams.

WF : Which client segment do you focus on and why?

Dhiraj : People in the late forties to Senior citizens. These people are generally thru will their basic financial goals, have seen various cycles in markets, have experimented with most of the products, have dealt will all kind of unprofessional and unqualified advisors and therefore better value professional advice and disciplined passive management of their money. Their returns expectations are also generally very practical.

WF : How is your experience with charging fees for advice? Are clients willing to pay in bad markets too?

Dhiraj : To be able to charge fee, one needs to follow the client's mandate in a disciplined way, do a lot of financial planning, periodically review and rebalancing the portfolio in a very disciplined way, offer them advice on income tax, FEMA, wills, trusts, succession planning, salvaging their past dud investments etc. I believe that bad markets are the best times for disciplined advisors, wherein every rupee you took off the table in booming markets has much larger purchasing power.

WF : You have an AuM of over 300 crs from over 200 families - and yet you manage to conduct periodic reviews with unfailing regularity. How do you manage this? Why is a periodic review so important for you?

Dhiraj : Out of this AUM, mutual fund represent around 200 cr and the remaining 100 cr is in alternate assets, stocks etc. Since we have a limited number of clients and a dedicated financial planning team which spends the first 15 days of the month in reviewing and rebalancing the portfolios, its manageable.

Periodic review is our most important activity as it leads to the timely detection of:

1. Any mismatch in the asset allocation set for the clients versus her capability to bear volatility.

2. Need to revisit the asset allocation due to any change in her finances or the financial goals.

3. Underperforming schemes to be weeded out.

WF : What is your team structure? How do you ensure that client facing staff deliver the same advice that you would have given?

Dhiraj : We have 4 people in advisory, 2 in research, 2 in financial planning and 6 in back office. The advisory team needs to gets the list of schemes to be advised, from by the research team. The financial planning team does the risk profiling and asset allocation for the clients. Also, the monthly review by the financial planning team ensures that the asset allocation set for the portfolio is being followed in a disciplined way.

WF : How have you segregated the advisory and service roles in your firm? How did you handle client resistance in the initial period?

Dhiraj : Every team member has a defined role. The clients don't resist since they know that all these processes are in their interest. We put in a lot of efforts in updating the clients on our processes. Much of our processes are a result of the feedback that we receive form the clients

WF : How do you propose to deal with the new investment advisory regulations?

Dhiraj : I believe that our processes are broadly in line with the new regulations. We believe that in this industry its important to pre-empt the regulatory changes so that the transformation is smooth.

WF : What are your plans for Prime Capital over the next 3 years?

Dhiraj : We want to be the most preferred money manager in India by adhering to values of simplicity, transparency and integrity while continuing to deliver steady performance over the long term. We are very selective about taking a client on board. In our setup, only those clients who want a disciplined and passive management of their money are welcome. Over the next 3 years, I plan to scale up the advisory team to 10 by adding people who are passionate about the mutual fund industry and want to make it big as a practicing financial planner, whether on their own or as part of Prime Capital or any other advisor. The exceptional performers have the prospect of being absorbed as partners. Alongwith that I plan to increase the number of clients to 300, each with minimum Rs 1 cr portfolio with us and double our AUM in the process.

I must add here that one of the critical ingredients in helping us reach where we are today and in giving us the confidence for the road ahead is the DFDA platform that I am a member of. The support and guidance we give each other within DFDA gives all of us a lot of confidence to stay focussed on growing our business and overcoming challenges.