WF: Can you please give us a little bit of a background about how you came into financial planning and advisory services and about your firm?

Sandeep Gandhi: In 1985 when I was in the eleventh standard, I realized that companies and public issues make sense to the economy and how public issues add value to smaller investors who have the money but not the risk-taking capacity. Rajkot was the centre for IPO distribution. We started with that and a sub-broker team. After Harshad Mehta's scam in 1992, we realized that somewhere we were losing money, or the client was losing money. We then realized that mutual funds are the best vehicle available for financial planning and we started aggressively marketing mutual funds and found success in the pre-2000 scenario. We were able to sell income plans, equity plans and since 1999, we have had the SIP concept too.

WF: Oh, you have been selling SIPs since 1999?

Sandeep Gandhi: At the end of 1999, SIP facility was not available but we fixed up a date every first week of the month to have an APR (additional purchase request) and we were able to show results in 2003-2004. The returns were fantastic even with a small amount of 1000 rupees. Now we are catering to almost all types of clients, more retail. We have a very strong relationship with most of our clients. My wife and father are also in the organization because we all love this profession. We all look after different segments of the business with around 600 clients right now. Our AuM is around Rs. 60 crores, of which 75% is into equity.

WF: Did you make any changes to your business model after these new regulations came in?

Sandeep Gandhi: Not too many because these clearly support us. We have started two things: first we have raised the bill on first of April this year. Second, we keep updating our clients regularly on what is happening in the market.

Most of the advisors in our region do not charge fees. Either they have left the business or they are shifting to FDs or direct equities, but they are still shying away from charging fees for mutual funds.

In FMP also we are getting only 10 paisa; we tell the clients that we will be happy if they pay us something in retrospect since we have given them the best product available.

WF: Since you are also very active in advising a lot of advisors in the Saurashtra and Kutch area, what are some of the ground realities of your area in terms of advisors coming to terms with the new environment?

Sandeep Gandhi: Most people who have entered in the last bull market and were having a small AUM of 5 crore to 10 crore have left the business. Others are doing some real estate business. Mutual funds are not being pushed aggressively. We have many problems in this area, some legal because the banking system is not that good in this region and the KYC circular is creating too much of a hassle with the clients.

In most of the cheques available with the banks, the name is not printed. So every time you need a passbook or a photo copy of the pass book with you. If it is a remote centre and if it is an application with a draft, you will have to request the branch manager to issue a certificate. Now one bank issues the certificate but they charge 300 rupees for the certificate. So the charge becomes an issue. Revenues are drying up and the cost incurred is huge.

Whenever I meet people, I assure them that this too shall pass and better times will come with newer products in the market causing AUMs also to rise.

WF: Another burning issue is KYD and AMFI statistics seem to suggest that less than 10,000 people have finished the KYD process right now.

Sandeep Gandhi: In our region right now that is not a big problem because people understand the importance of KYD. So whenever someone travels to Rajkot or Ahmedabad, he will go with all the papers and finish the job.

WF: There is some talk of approaching SEBI again with a variable entry load proposal. Do you think variable entry loads will help advisors in your region?

Sandeep Gandhi: I don't think so. The problem is that whenever you put a variable load fee, let's say 1% or 0.5%, the client will know and will ask why he should pay that amount. Asking him to fill in a 1% or 0.5% in a form is also perhaps as difficult as asking him to give a second cheque for your fees. When the client decides how much to pay, he will want to pay nothing. So, variable entry loads may not be a solution.

WF: The other issue being talked about in the industry is the need for a platform for advisors and that platforms can solve a lot of problems for advisors. There is a talk about an AMFI platform; earlier we had a stock exchange platform. Do you feel advisors really need a platform or is something else the problem?

Sandeep Gandhi: A technology-driven platform would definitely make sense because it will be hassle free for clients as well as for the advisor and cut down costs too.

WF: Other than variable entry load and perhaps a platform, what needs to be done to make more advisors interested in selling mutual funds?

Sandeep Gandhi: The only solution is to expand the portfolio. Their AUM has to increase. There would be different levels of charges for different levels of service. We can see what's happening in equity broking on the trading platforms we have in the market. People trade at 5 paise as also at 1%.

If your investor makes real wealth, you will automatically grow with him. Money will automatically follow if you have the passion for this profession. Earlier people were in the profession due to the money; now that will probably not work.

WF: Moving on to your own success story, Sandeepbhai, could you tell us how you went about winning your biggest client?

Sandeep Gandhi: I will talk about two of my biggest clients. One was a hardcore equity investor who knew everything about equity. If I was confused, I would consult him! But sitting together and discussing prospects, we would feel that a particular mutual fund was a good option.

Genuine advice works. You may not be correct every time but you must be able to explain the rationale for your advice every time. If your advice goes wrong, you must be able to honestly explain where your call went wrong. The client should feel that you are with him in all the phases of the market. Social pressure prevails a lot in our region and so genuine advice is a very valuable method to succeed. With my biggest client, he knows I am genuine. I am humble enough to consult him when I am confused, it adds to the mutual trust in the relationship.

My second biggest client started in the bull phase of income funds. I eventually told him that he had the capacity for risk-taking and he should diversify into equity funds as well. Today, his portfolio is earning huge returns. Nowadays, when he wants advice on something not related to finance also, he consults me! So I feel genuine, transparent advice is very important.

WF: And finally, Sandeep Bhai, what are your plans for Mega?

Sandeep Gandhi: Mega plans!

WF: Where do you see Mega three years from now?

Sandeep Gandhi: At this time, we have too many problems. People are not accepting mutual funds because mutual funds mean only equity mutual funds to them. Second is the difficulty in charging fees. We also have a problem getting good people in our team. So, our first priority is to consolidate, and overcome these hurdles.

Having said that, within the next 3 years, we should be at least double the current size, if not more.

               

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