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  • Most clients are extremely loyal to their advisors. All they expect is an honest advice and good service. They may talk about returns but eventually they value relationship more than just returns. This makes the job of an advisor very very simple. Just do your best and you can retain clients for very long term. Yes, 10% of clients can still leave you for whatever reasons but 90% will stay with you.  The choice is yours; whether you want to focus on those 10% or the other 90% who trust you, respect you and give you growth in life. Stay loyal to your clients.

  • The budget has become routine for the markets. Like any other event. Don’t overemphasize it. Don’t try to be ‘Me First’ in sending budget highlights to clients. Many clarifications take a few days to come. Also, send only those changes/highlights which are related to your work. Nothing more. Clients want the gist, not a big list. A 3-4 lines summary is good enough. Don’t jump on conclusions. Things settle down faster than you think. After a few months even you will find that everything is routine. Make it boring for the client. Make it routine for yourself.

  • Financial markets are dynamic. Things change over time. We used to consider mutual funds as very safe. They still are but defaults in debt market is impacting debt funds negatively. Any which way, It was difficult to sell debt funds to clients over bank fixed deposits and on top of that if a debt fund scheme nav goes down due to write-offs, it will become even more difficult to convince clients to invest in debt funds. As such, it’s important to scrutinize debt funds before recommending. Avoiding or ignoring debt funds is not the solution. Get the required knowledge to understand it. Look at the underlying portfolio. Don’t just select a fund on the basis of yields. A little lower return with higher safety is better. Also, diversify your investments in a few AMCs and funds.

  • During bad markets, portfolio of clients go down. Some IFAs, when they approach other existing clients and look at their portfolio, bad mouth the earlier IFA suggesting that the choice of AMCs and schemes were not good.They say that the investor should not have invested so much in small cap or mid cap, or the equity allocation should have been less. While, there may be few examples of wrong selling but we should not harm the overall reputation of IFA fraternity. This is not the right thing to do. Before we put another IFAs into bad light, we should introspect our own client’s portfolio and the choices we made for our clients. I am not saying we should support IFAs who did wrong. I am just saying, when things don’t go right, we all should act responsibly and stay away from negative marketing. Most IFAs are doing a very good job. Let’s respect each other.

  • As a financial advisor, you will definitely grow over time. There is no quick fix way. There is now one way. Keep exploring and keep trying different things. Write blogs. Create a channel. Do seminars. Send mailers. Advertise. Attend conferences. After a decade when you will become super successful and you look back at things you did, you won’t be sure what exactly made the difference. May be nothing of the above. May be everything. Whatever it is, you will have a very satisfying feeling that you did an honest effort during the journey. Experienced advisors can guide you but at the end of the day you have to do the walking. When you reach the top, money and fame won’t excite you as much. The beautiful memories of hard work during the way will give you the greatest satisfaction.

  • The simplest business I have known is mutual fund distribution and yet many IFAs are making it look complicated. It is not a rocket science. All is requires is; meet more and more people, sell more and more SIPs, focus on asset allocation, provide exceptional service, stay with client for long term, manage client’s behavior and hire employees. It looks too simple to be true but it is. The biggest truth is – if you separate yourself from the noise and work silently, you will make it big.

  • It is quite natural for clients to look for higher returns but as investment professional we must know that safety is their primary concern. In good times, they tend to compare returns of equity markets with their own portfolio. Yet, when markets fall, they want you to protect their wealth by having lower risk products and more allocation to debt. This is a behavior issue which we need to handle. It is important to read the mind of the investor and suggest asset allocation accordingly.The rule is; if you are not sure, take lower risk. Remember, they don’t know how to handle their own money and so they are coming to you. With time, you need to develop this expertise of behavior management.

  • Revenue will always be under pressure as the industry matures. Don’t worry about that. Also, you have no control on this. You should always focus on increasing volumes. That is possible with efforts. The pace of volume growth will reduce the impact of commissions going down. If you accept this fact that margins will be under pressure, you will be able to handle such situations in the future in a better way. Keep your personal expenses under control. They should not be more than 35-50% of your gross revenue. Rather, you should invest more in your business for accelerated growth. Don’t fear the future. Build it such a way that it can handle the shocks.

  • STPs could be used in many ways. It could be used as a capital protection strategy wherein only the appreciation amount can be transferred to equity funds over a long period of time. This is the safest strategy and accordingly, returns would be modest too. Another way to use STPs is when clients want to invest lumpsum in equity funds but not sure about which way the markets would go and therefore want to reduce the risk. In such cases, you can do a fixed monthly transfer of amount in such a way that the funds in debt scheme is exhausted in 6 months or 1 year or 3 years, as the case may be. This is not a capital protection strategy but has the potential to enhance the returns due to higher exposure in equity market while reducing some risk by spreading equity allocation over a few months or years. STP is a wonderful tool. Use it well.

  • After 2018 finance budget, it makes more sense to invest in growth option. This is because, tax deferment is considered to be better than paying upfront tax. If the clients want regular income through dividends, SWP option could be used effectively.  Also, for IFAs, it helps in reducing the erosion of AUM due to dividend payout option. Dividend re-investment option now doesn’t make sense except for very specific client to client requirement. For existing investments in equity funds which are in dividend option, you can consider to move them in growth option after units have become long term (LTCG). SIPs in dividend option can be immediately stopped and restarted in growth option.

  • Few AMCs and IFAs promote daily or weekly SIPs. They claim that historical data suggests that returns are better because of this. Many IFAs are confused as to what should be the right strategy for SIPs. I think daily or weekly SIPs don’t make much sense over monthly SIPs as a strategy. Daily or weekly SIPs also involve large number of transactions which should be avoided. While some studies may point toward slightly better returns but it is not always the case. Sometimes, it could be opposite too. Keep it simple. Focus on monthly SIPs. At best, if the client is having multiple SIPs, spread them over the month. Apply simplicity. It works better than daily or weekly SIPs.

  • Remember this. Every rise is not the top and every fall is not an opportunity to buy. Don’t always jump to do bottom fishing. The portfolio returns are not impacted much by buying small amounts during market falls. It’s better to wait for markets to fall further or to stabilize before you commit fresh investments. Yes, you may miss out on a few opportunity but will also be protected when markets run into a bear phase from continuous fall over a long period of time. A token buying from clients to show support and belief in the market is welcome but not a strategic allocation. Waiting helps – both while going up as well as when going down.

  • No doubt, a lot of investors are moving ‘direct’. It’s there choice. Some of them will benefit from it also while it will not work for many. A lot of IFAs and industry participants are unnecessary creating hype about adverse effect of going ‘direct’. Explaining the advantage of having an advisor is welcome but showing an investor in bad taste without an advisor is negative marketing. In fact, such marketing campaigns also create investors interest in checking out on ‘direct’ who were previously not keen to explore it. Telling the client that you will lose and suffer without an advisor is not the right strategy. Rather, we should focus only on explaining the benefits of staying with the advisor. Watch my video here – 9 Points to convince clients about staying back

  • Challenges are part of any business. In our business, regulations are becoming stricter and many IFAs think it will make them extinct. No, it will not happen like this. From the time entry load was banned, IFAs are concerned about one thing or the other. Still, the industry has grown and IFAs have grown too. In future also, things will change and certain challenges will emerge but the industry will keep on growing and IFAs will keep on growing. You need to consider yourself as a part of the industry, not away from it. Be positive and embrace the change.

  • SIP is a killer. It works so very well for clients and for IFAs too. It starts slow but moves at lightening speed once it gets momentum. Even when IFAs sleep, the AUM grows because SIPs are hitting the clients bank account all the time. It helps overcome other redemption’s that keep on happening regularly. It averages quite well in bad markets and gives superior returns over long term. Hundreds of IFAs have grown multi fold in the last decade because of good SIP book. The future is not going to be different. Watch my video on ‘Power of SIP’ here.

  • It is important to hold clients for long term to benefit from them. It takes a lot of time to acquire a client and so it is crucial that they stay. It is best to get new clients in the system who have never invested in mutual funds. The rule is – if you do the KYC of the client, you can expect them to stay longer with you as the factor of loyalty comes in play. The initial hand-holding is the key. This happens in most of the cases. If you get clients by poaching, it won’t work in the long term as the same client is vulnerable to go elsewhere too. This business is about making new clients and sticking with them over decades to reap the benefits.

  • As an IFA, our ultimate objective is to increase our AUM and increase our revenue. However, in order for this to happen, we must always be on the client’s side. There should not be any conflict of interest. IFAs need to work with integrity and total commitment for the client. Once clients realize that the IFA is playing from their side, they will always keep you in the team. With time, clients will win by scoring goals (invest big amount) and you too will win because you were also a part of the team.

  • A lot of IFAs engage in posting lot of negative messages (profession related or otherwise too) on social media. Stay away from it. Your clients are watching you. It creates a negative impression. Use your public profile responsibly. Create a positive brand of yourself.

  • I remember, around ten years ago, IFAs used to be concerned about the future of mutual fund business since entry load was banned. They thought it would be difficult to live only on trail. It all went off well. In the last five years, IFAs were again concerned about Direct, commission disclosure and other regulations. I think IFAs have generally progressed well in the last 5 years. Today again IFAs are concerned about the future of this business citing many issues. I guess, IFAs who stay would generally be happy after five years. But after five years again, there would be IFAs who will be doubting about the future of mutual fund distribution and advisory business. So, it will go on and on. Don’t spend too much time on it. Keep preparing, keep changing and keep taking care of clients. Everything will settle down. That’s what I think will happen.

  • I coined a golden strategy to grow in mutual fund business. It was the rule of 10/10 – to meet 10 existing/prospective clients every week and do 10 hours of reading and learning every week. Those who are following this rule are growing. A lot of IFAs are not happy about their growth though they keep busy all the time. When I ask them are you doing 40 meetings a month?, they mostly come out with numbers of 10 or 15 or 20. That’s the problem. You must meet 40 clients for maximum output. Till the time to follow this rule, you should not make excuses and complain about mutual fund distribution and advisory business. Watch my video on ‘The Rule of 10/10’ here.


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