Sell Well - Grow Well, a joint initiative between SBI Fund Guru and Wealth Forum, is an effort aimed at encouraging and guiding distributors on a path towards right selling - which we firmly believe is the best way to grow well on a sustainable basis.

Six words sum up Lallit Tripathi's motto. Six words turned his entire business upside down and led him to build a sustainable, client centric business model - a far cry from a product led distribution model that he originally embarked on. Everyone stumbles, but few are able to pick themselves up, acknowledge their mistake, learn from their mistake, and emerge stronger, bigger and better from the experience. Read on to understand how Lallit Tripathi learnt from his mistake to build a robust business. Read on to get a first hand account of what we mean when we say "Sell Well - Grow Well".

I learnt my motto the hard way

"Perfect your science, commerce will follow" : this is not a proverb that I read somewhere, it is my own motto, which I coined for myself. And, it's a motto that I learnt the hard way. And, it's a motto I will urge every distributor to adopt, if you haven't done this already - because it is the only sustainable way to build your business.

I got into MF distribution in 2004 a little tentatively at first, but got into it seriously only in September 2007. This was at the height of the equity boom, when so many NFOs were coming and investors were lapping them up. I plunged into the action and in just 4 months, I accumulated an equity MF AuM of over Rs. 40 crores. Then came the crash - and it shook me to the core. I had never anticipated this, nor had my clients. It was a bruising experience. That experience taught me an important lesson, which changed my entire orientation towards my business. From simply selling what sells, I started focusing on understanding markets and products a lot more deeply and forming my own judgment on what was good and not good - rather than what will sell and won't sell.

I realized that selling equity when it is an easy sell is focusing on your commerce - on how much money you will make from this month's sales efforts. Instead, you should focus only on the science of your profession - on becoming a good advisor who will take his independent calls solely based on client interest. If you focus on the science of your business, the commerce aspect will always follow. It has to.

Think of any champion : this motto is what they live by

Sachin Tendulkar did not dream of how many crores he will make when he picked up his bat and started practicing his profession. He was only focused on how to hit every ball to the boundary. He wanted to become the best in his profession. The commerce aspect followed him, and he probably became richer than he could ever have imagined. Likewise, Lata Mangeshkar did not dream of money when she began practicing and perfecting her profession. She focused on the science of her profession, the commerce followed.

This realization of the fundamental mistake that I made, and I guess many in our business too made, led me to a completely different path. I did my homework on markets and on products. I made the effort to be in touch with experts to keep sharpening my own skills. I began looking at product categories that were more or less ignored - at least in Ranchi - but which I thought made very good sense.

Building a client centric business

I started publishing a magazine, where I spent a considerable amount of money sourcing data from ICRA, but which educated my clients on markets, on products and on investment strategies. The magazine became popular and got healthy circulation in Ranchi.

I started recommending FMPs to my HNI and SME clients in Ranchi in 2008 - when the product was more or less unheard in our area, and was also only a niche product in larger cities. FMPs really became popular only from 2011 onwards, but my clients made healthy returns much before, because we managed to capitalize on high yields at different points of time. I started promoting gilt funds in 2009 - again, going against the herd, into a category that was almost unknown in Ranchi. It took quite an effort to explain the merits of gilt funds and how they benefit from a reducing interest rate cycle. Mutual funds for most investors in Ranchi continued to mean equity and nobody wanted to go anywhere near equity. So, reluctance towards mutual funds was very high.

With perseverance and continued education efforts through my magazine, I was able to build an AuM in excess of Rs.100 crores - which in 2009 to 2012 was largely in debt funds. I rebuilt my business, by focusing on the science of my profession, gaining a deeper understanding on markets and products and advising my clients to invest strictly according to their risk appetite and asset allocation plan.

One insight I did develop through these ups and downs is that while clients are willing to look at a long term horizon, the reality is that if in 1-2 years they don't see decent returns, they do start getting edgy and uncomfortable. It is important to understand asset classes and their behaviour through market cycles, for you to help them go overweight in asset classes that you think hold good prospects for the next 1-2 years, even when sticking to an overall asset allocation plan. My decision to go overweight on debt, to focus on FMPs at one stage and gilt funds at another stage of the equity downturn, helped my clients earn healthy returns even while equity markets were going nowhere.

I also follow a philosophy of booking profits regularly. Clients like to see returns actually getting crystallized rather than remaining only on paper. This practice of booking profits helped me get sizeable amounts of client funds out of long duration funds in May 2013 - two months before the July 2013 events. I have a habit of regularly speaking with fund managers and experts to help me formulate my own thinking. The weakening of several macro indicators was beginning to get fund managers worried by May 2013 and I tracked these indicators a lot more closely. When I saw that the indicators are deteriorating on one hand and healthy profits had accrued in client portfolios due to the rally, I took a call to follow my discipline of booking profits, without paying attention to all the views that were floating in the market at that time. This decision helped my clients significantly, and reinforced my belief in taking profits when rallies gather a lot of momentum.

Since the last 12 months, I have been strongly advocating balanced funds to my clients. I have understood that a blend of caution and aggression is probably in clients' best interests, as many clients cannot really stomach too much volatility, regardless of what a risk profiler may suggest. Balanced funds I think are a hugely under-recognised and under-sold product category. In the present market context, I think balanced funds must be a core proposition in every client portfolio. The quantum may vary as per individual asset allocation decisions, but I think it is a must-add in every portfolio.

My next goal

Going forward, one aspect of my business that I want to devote my energies to, is to find a cost effective way of serving retail clients. There is a vast opportunity that is available, provided we get the model right. I intend exploring how we can use online models to penetrate deeper into retail markets even in small towns. It will take some effort, but once you stabilize a cost effective model, you have a huge business opportunity waiting to be tapped. Retail clients need good advice, but many of us are unwilling to serve them as it is not cost effective. This gap between demand and supply must be bridged with some innovative thinking - and that's what's now on my mind. It goes back to my motto - perfect your science, the commerce will follow. I need to perfect the science of delivering good advice to retail clients cost effectively - the commerce will follow.

All articles in the Sell Well - Grow Well section are created by Wealth Forum. These are not to be construed as opinions given by SBI Mutual Fund.

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