In 1989 Sadashiv Phene, an independent financial advisor, took a loan of Rs 1.85 lakh from Life Insurance Corporation of India, to buy a flat in a Mumbai suburb far from Dalal Street.

“You can get an idea of how little I must have been earning then,” he says. But by 2007, Mr Phene was doing not just better, but phenomenally so. He had bought a flat in the upmarket Vile Parle area for a couple of crore rupees, and that too without taking a loan. Today, the 47-year-old is worth several crore rupees — Mr Phene would only say “under Rs 10 crore”.

Mutual Benefit

Mr Phene is from a middle class family, and he sells mainly mutual funds, acting as an independent financial advisor to his clients numbering a few thousands. He says he came by so much money by following exactly the advice he gives his clients.

All his money has come from mutual fund distribution. And all his wealth has multiplied through investment in these very same mutual funds, he says.

Mr Phene puts his money into debt funds and managed, diversified equity funds. Balancing investments between the two types of funds, depending on the market situation, is his speciality. “Index funds are not for India,” he says when one points out that the benchmark indices are currently back at where they were three years ago. “Well-managed funds can beat the index.”

Now that the entry load on mutual funds has been banned, there is not much money to be made from fund distribution, agrees Mr Phene. But he has such a large clientele — at any point, he is advising 1,000-2,000 families — that even these wafer-thin margins are enough to sustain him.

Advising wannabe millionaires

Not that Mr Phene needs to work to earn a living anymore, but he says he gets a kick out of seeing middle-class people like him make loads of money. “I visit clients from 9-30 a.m. until midnight.” He personally services every client himself and is known to most CEOs at mutual fund houses. Once or twice a year, he attends fund conferences overseas. “I visit all my clients myself. This is a personalised service and I cannot send staff or sell through the computer.”

Persuading clients to hang on to their investments even through bad times is a tough job, he says. “I ask them to stay invested in their funds till they actually require the money.” He has his own example to show. He says kept buying Morgan Stanley's listed scheme right through the days that it was in a slump. When the NAV was Rs 10, it was quoting at Rs 7; when the NAV was Rs 14, it was being traded at Rs 10. Through all this, Mr Phene kept accumulating the fund units in the thousands. Finally, when the fund was converted into an open-ended scheme some years later, he had made a couple of crore rupees.

Starting small

He himself started investing small, first in thousands, and then ten-thousands each month. Nowadays, he invests in lakhs, but always in mutual funds. “I have kept investing right through market crashes, floods, earthquakes and changes in government. The most difficult thing is to convince my clients to invest when the market is bad. Everyone has a tendency to do exactly the opposite and withdraw investments when the market is bad.”

Even in the current scenario, when mutual funds have fallen terribly from favour, Mr Phene recommends steady investment in them. He has a number of stories of clients who held on to funds for 10-15 years and got returns 30 to 40 times. “The Indian economy will keep growing no matter what, and if you are invested long enough, you only stand to gain.”

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