19th February 2012

WF : How did you get into the financial advisory profession and how has been your journey so far?

Pradeep Jain : After completing my engineering & MBA in 1986, I was inclined to setup an industry at Surat. But, after installation of machinery, there was a strong feeling of home sickness & I sold the establishment for profit and came back to Ranchi to take up Survey & Loss Assessor job. My father was in Life Insurance business and while helping him I found it more lucrative to be in financial advisory.

In 1988, there was no qualified person in financial advisory in Ranchi. I learned all about Income Tax and Tax Savings Schemes and met all the Income Tax Practitioners and offered to help their clients in doing proper Tax Savings to full extent. Fortunately all of them became my clients and started referring me to handle the Tax Saving needs for their clients. This helped me get a firm footing in the Ranchi market and I started building my office and team with confidence. Postal savings, life insurance and general insurance were my initial products.

In 1988, one of the leading Tax Consultants made me understand the forthcoming changes in the PPF scheme and under his guidance I became the 2nd PPF Agent in the state of Bihar - after Manu Mehrotra's father in Patna. I started selling PPF to each and every person I could see, for Rs 100 per family member. Subsequently, with the increase in Interest rate and for other Tax Benefits, this scheme became very popular and by that time I was having a large client base, who were committed with me for 15 years.

Unit Scheme 64 was the first mutual fund that I sold - but in those days, we sold it for additional Rs.3000 tax free dividend income. Later on, UTI's MIPs with high assured returns Children Growing Gift Fund, Raj Laxmi Unit scheme etc gave a big boost to business and it became parallel to Postal savings in my office.

My first introduction to Stock Market came through UTI Mastershare, Master Plus, Master Gain and similar Schemes from UTI. Later on I worked for Bank sponsored Mutual Funds like BOI, SBI, Canbank, Indian Bank and many others for their guaranteed return schemes like Can Double, Can Triple, Magnum Triple, BOI Double Square plus etc besides their equity schemes. The first private sector Mutual Fund for me was Kothari Mutual Fund, but it was ICICI Mutual Fund that really worked hard on me to explore my business potential.

During those days, I also worked for Company Fixed Deposits for two years, but left the same due to a bad experience. We trusted the triple A ratings that were being given to NBFCs - but little did we know that in no time a triple A company can become a defaulter. My clients suffered due to their exposure in Lloyds Finance. I never went back to company deposits after that.

At present my focus areas are Life Insurance and Mutual Funds besides other Tax Savings Schemes.

WF : What would you list as some of the major milestones / significant achievements in your career as a financial advisor?

Pradeep Jain : Some of the recognitions I am happy about include :

A) Maintained position of best PPF agent in the state of Bihar & Jharkhand since 1988 and was recognised as one of the Top 20 Agents in the country for several times.

B) Maintained position of one of the Top 3 Postal Saving Agent and Recurring Deposit Agent in the state of Bihar since 1990 till 2007.

C) Maintained position of Chairman's Club Membership in LIC since 1994 till 2011 and now upgraded to Corporate Club Membership. 4 times MDRT qualifier and 2 times COT qualifier.

D) In mutual funds, I am recognised as Solitaire Club Member of ICICI Prudential, Platinum Club Member of Reliance Mutual Fund, Gold Club Member of Birla Sun life and National Category Distributor of HDFC Mutual Fund.

WF : What is your business model - types of clients, client base, AUM, products, service offering?

Pradeep Jain : Most of the clients are business people and professionals. For mutual funds we are serving 856 families containing 1923 investors. Present AUM is Rs 54 Crore with Equity component of Rs 33 Crore, Debt funds of Rs 15 Crore and Rs 6 Crore in Balanced Fund. Approximately 12 Crore AuM has been built through SIPs. Apart from mutual funds, we also have substantial client base and assets in Tax savings schemes and insurance products.

I am operating from a fully supported office where majority of the sales and services are taken care of through skilled colleagues who are supported with latest technology. For Mutual Funds there is a help desk which is ready to reply to every query during the working hours with support of software and data. Portfolios are emailed to the clients every Saturday. Service requests are taken care of on that day only. Sales are mostly done on the basis of phone calls and portfolio discussions and are concluded through knowledgeable executives.

Till 2011 my main focus was SIP and Equity related Investments through Mutual Funds. Debt component was mostly taken care of by PPF and Postal Savings. In 2012 Debt and Equity mutual funds are in equal focus beside special focus to SIPs. SIP is my strength. At present I have live SIPs for Rs 52Lac per month. I would like to take this up to Rs. 80 lakh per month by the end of this year.

We offer need based solutions to our clients and for this reason our portfolio turnover is very low and SIPs are not withdrawn.

WF : One of your biggest differentiators is your "4 hour service guarantee". Can you give us some details of this service guarantee and what are the processes that you have instituted in your firm to ensure adherence to this guarantee?

Pradeep Jain : Firstly, it is important to understand that giving a service guarantee gets the whole office into the correct frame of mind - of dealing with every single service request quickly and efficiently.

We promise to attend to every service request within 4 hours of getting the service requests. All clients within 3 kms radius of our office get a door step service guarantee. In a small city like Ranchi, a 3 km radius covers practically our entire client base.

Our representative reaches the client's place within 4 hours of our office getting a call and will help with all the information, forms, execution etc that are normally required by clients. We have a central help desk that receives all service requests. We have 4 service people always on the field, with mobile phones. Our help desk identifies who is closest to this client and directs him to attend to the request. Sales team is different from the service team. This ensures that service is not ignored due to a desire to execute more sales.

The help desk keeps a track of completion of the service request and ensures customer satisfaction after the job is completed. We have a full time steno for written communications on behalf of our clients and the clients are required to just sign the papers. The help desk informs clients about how much time certain service requests will take at the respective AMCs end and will track these until completion. Any delays are brought to my notice and I personally intervene to ensure that issues are sorted out quickly. Feedback is given to clients constantly, so that they are fully appraised about what is happening on their service requests.

We strongly believe that our client should not apply their mind for Mutual Fund services and their dependence upon us becomes our strength. They also seek our services in making their Charted Accountant understand their Mutual Fund Statements and Tax related queries.

We have a total team strength of 19 people, between sales, service and accounts. Having a good quality team is essential to ensure that we are able to actually deliver on this service guarantee. As I mentioned, service guarantee is more about creating a mind set in your team. Once that mind set is there in your team, service efficiency will automatically be good.

WF : Has this promise of service guarantee enabled you to acquire clients?

Pradeep Jain : Yes, absolutely. When a client becomes totally dependent on you and knows he can completely rely on you for everything related to his investments, he becomes a loyal and blind supporter. He not only reposes his 100% faith is us, but is very happy recommending us to his friends.

WF : You have an HNI base as well as a retail base. Your client base extends from Ranchi's most famous celebrity to a vast retail client base. How do you service two different sets of clients who have perhaps different expectations from your firm?

Pradeep Jain : HNI as well as retail clients are served on same priority. The only differenc e is that the HNIs are served by the best trained persons of my office. All communication to this group is routed through me. Even the service request received as well as the turnaround time is also brought to my knowledge. Advisory for HNIs is done by me. Retail clients are serviced by our sales and service teams.

WF : You tried your hand at stock broking but gave it up. What were the issues you experienced?

Pradeep Jain : In 1992, when the stock markets were peaking, the trading platform and transaction system was not electronic. There was a lot of manual work in settlements, bad deliveries etc. But the biggest issue with broking was credit risk - where some clients denied contracts when markets fell sharply and refused to honour deals. I suffered substantial losses due to this and decided that this business was not for me.

WF : You have been a big mobiliser for postal savings and PPF until recently. With the new commission rules now making these products unattractive for distributors, are you continuing these product lines? How do you deal with clients who still want to invest in these products ­ which are no longer attractive to you?

Pradeep Jain : We have decided to stop new deposits under Postal Savings. We are however serving our existing PPF account holders and requesting them to give us service charges to compensate for the lack of commissions. We are also persuading them to consider alternate products like mutual funds. While we try and enhance our revenues by cross selling other products, we are committed to continue serving our PPF clients who came into this product with a 15 year view. We are not abandoning them mid-way, there is a cost of maintaining that service and we will bear that cost. We may try to reduce its impact by service charges and alternate products. But, clients cannot be left mid-way.

WF : In the mutual funds and insurance businesses, margins have come down considerably in the last 2-3 years. What are some of the steps you have taken to counter this margin pressure? This is especially relevant in light of the extensive service infrastructure that you have built up to offer your customers a service experience that is not easy to find in the market.

Pradeep Jain : As a businessman, I am not interested in margins, but my interest is on net profit and whether my net profit is growing satisfactorily. Margins have substantially reduced, but turnover has also increased with better saving capacity of my clients and their awareness to do it. Many advisors have left the job and many have not been in a position to provide adequate services due to poor margins. This has given an extra edge to my firm. Further, cross selling multiple products helps boost revenues. Hence I see low margins as a big opportunity to capture the market.

WF : What would you list as some of the key strengths of your firm? What are some other areas where you would like to strengthen your firm in the next 1-2 years? What steps are you planning to take to achieve this?

Pradeep Jain : Our key strength is client loyalty and faith, brand equity, flexibility to accept change in environment, continuous learning and sharpening of skills, best practices for after sale services, skilled and motivated team, adoption of technology and support of many Fund Houses and IFAs.

In next two years, we want to add 400 high potential clients to our client base and for this we have identified them and have started sending them greetings and educational materials. Results have started flowing in. There are multiple ways in which we have started an engagement with them. Rather than keep doing cold calls, we first start an engagement, get them to know us better and create that little bit of a pull factor. You can't win HNI clients on push alone - some pull for your firm must be there. Once that little pull factor is there for our firm, then going all out to acquire the client gives better results.

We want to adopt financial planning process for our clients and would like to help them in achieving their goals on a continuous basis. We have been looking for software for this purpose, and believe that your Wealth Planner software will be of help in this regard. We are keen on professionalising our firm even more and introducing more advisory processes. Your i-mentor session was very helpful in this aspect.

We have added Health Insurance as a new vertical. We intent to add more people in our office to increase our connectivity with the clients.

WF : As one of most successful distributors in your region, what would you advice fellow advisors, particularly in smaller cities, to enable them to increase their growth momentum?

Pradeep Jain : Firstly, we have to understand that financial advisory is a long term business - you must be prepared to grow your business step by step over a number of years.

Secondly, in this business, you need a combination of knowledge as well as relationship skills. We need to work every day to enhance our knowledge - but that alone is not sufficient. You need to be able to strike strong relationships based on trust with your clients. Honesty in advice and superior service is what builds trust and confidence.

Third is that you need to seek maximum exposure in your city, in your community to ensure that the maximum number of potential clients come across you one way or another. I am for instance associated with over 12 active social causes in our city, and serve in various capacities on many charitable and social organisations. Being active in social organisations is necessary to develop your contact base. Devoting time to them is necessary to build good relationships. When people see that I serve on the boards of various popular social organisations which they are familiar with and relate to, that itself gives a positive signal.

Fourth is to organise yourself in such a manner that you personally spend the least possible time on operational matters and the maximum possible time on meeting existing and prospective clients. You must invest in an office set up and operations people, otherwise you will not be able to devote time to grow your business.

Fifth, you need to ask for a sale. Don't fight shy of asking for business. If you ask for business confidently, you will get it. If you are convinced that a product is right for a client, go confidently and make a strong sales pitch. Often, when you recommend in a tentative manner, clients don't develop confidence. When clients are not confident, they postpone the decision. If you give them the confidence, they will instantly make the decision and go with your recommendation.

And lastly, keep educating your clients. That is the surest way of building a pull for your firm.