Compounding of Businesses
There are plethora of articles on the net and quotes regarding compounding and how it works magically or like wonder of the world.
Just like compounding works organically for an individual. It works for a business also, and the process gets magnified and expedited if the processes and business practices are ethical and dependable.
I will relate once such business and the owner to you.
On 6 of June 2002 a youngster came for an appointment with me as a mutual fund advisor or distributor as an employee of a not a very well known brokerage firm. He arrived half an hour late by when I had decided to leave for some other place .
We met the next day and I told him that the first step of credibility is being punctual. He never gave me another chance to repeat myself.
I had already been investing in mutual funds for some years after my extended interaction with Mr. Shanbhag. But having found a new person closer home, I started challenging his intellect and observing his business practices.
It’s not that we would agree upon every fund that I invested in, but he always had a reason of suggesting a particular fund to me.
In a span of five years, he won my heart and mind so much so that I persuaded him to resign from his company and set up his own advisory plus distribution business.
In 2007 shortly after he went solo, the entry load on mutual fund was scrapped, which was a direct loss of about 2.25% for any distributor and soon after the brokerages for distributors were also reduced greatly to them below 0.3%.
The very next year, there was a global meltdown because of American banking system, causing almost 0 inflows in equity.
In 2013 the Direct mode of MF purchase also affected business for distributors
At times I felt guilty at suggesting him to go independent and offered to share his business and personal expenses, but he was not to be affected and he marched on.
It took roughly 11years to accumulate AUM of One hundred crores. The next hundred crores came in just 3 1/2 years. … and last week going on the reverse he was giving party to the mutual fund industry for reaching 300 crores in just two years.
At this point, it is important to note that a very small amount may have come by way of new and fresh investments from his clients and roughly 30% must have come by the incremental wealth of his clients. And that precisely is his tagline . He does not believe in churning funds for his clients but says that ,“The only way I can benefit is by increasing your own wealth”
His reliability is such that people would trust their WILLS with him rather than their own family members. While working on board, I would leave the entire checkbooks and transaction slips signed with him for regular bulk purchases in case the market went down.
Against my strong advice during the Covid lockdown, he would regularly take his aging clients to AIIMS and other hospitals.
Not only my friends, colleagues and relatives he has helped me generate meaningful wealth, for my domestic helps and many other people from the economically challenged background.
One thing that he started very late for himself was investing for his and his own family, and I am very proud to say that I cajole , monitor and reprimand him for various of his choices.
He must be the only distributor and financial advisor who listens to his client for his own investments.
Now putting a name to this compounding, wonder- ladies and gentlemen, let me present Pankaj Jaiswal , a profile in moral courage , patience and credibility .
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