IFA Business FAQs : Sales (52)

  • The following sequential parameters should be used to select AMCs.

    (1) Brand of the AMC

    (2) Overall AUM managed by the AMC

    (3) Consistent performance of the AMC

    (4) Relationship with the AMC

    (5) Service standard of the AMC.

    Don’t just choose on the basis of performance. Performance rotates. Focus on long term consistent performance.

    Watch my small video on ‘How to Select AMCs’ here.

  • At any point of time you should focus on just 5-6 AMCs. If you wish to add another AMC, you should consider removing one. It will be easier for you to manage your business by focusing on few AMCs. Due to practical reasons, you may have exposure in 8-10 AMCs at any point of time because, when you stop selling certain AMCs and select another AMCs, all your AUM in the earlier AMC may not be switched to newer ones. Don’t worry about it. Active AMCs in your selling list should not be more than 5-6. That’s enough.

  • There is no fixed rule for this. However, it may be better to ignore sector funds or have very little exposure. While they may offer higher returns if your bet goes right, the risks are far higher. Entering a sector fund is easy. Exiting at the right time is tough. You should focus on Large caps, Multicaps and Midcap funds.

  • You should do at least 2 client meetings each day, 10 meetings each week, 40 meetings every month and 500 meetings every year. This includes existing clients, new clients and even multiple meetings with same clients. Meeting will be qualified only if you spend 30 minutes or more with the client. Watch my video here.

  • Initially, SIP Book target should be 2% of your AUM. So, if your AUM is 5 crores, SIP book should be around 10 Lacs. As your AUM grows, you should at least have 1% of SIP per month of your total AUM. If you follow this, you will become a top IFA. Watch my video here.

  • Focus on mutual funds. Spend 70% of your time in selling mutual funds. Sell SIPs. Meet 2 clients (existing or new) every day and discuss mutual funds with them. Read 1 hour every day. If you do these things, you will certainly become top IFA.

  • Yes. Top-up SIP is a very good process. It helps the client increase savings automatically and helps IFA increase SIP book and AUM. Under Top-Up SIP, the client gives standing instructions to increase his/her SIP by a fixed amount/percentage every year.

  • SIPs work in all funds. It will also work in a sector fund if clients continue SIPs even in bad times. However, risks are more in sector funds and clients may panic and stop their SIPs in between. Therefore, you may avoid such funds. Focus on large caps, multicap and mid caps. Even if you must give sector funds, keep it limited to 5-10% of the total allocation.

  • If a scheme is continuously under-performing the benchmark index and comparative schemes (year on year) for 3 years, you should consider exiting the scheme. Don’t decide on the basis 1 year returns. Also, don’t decide on the basis of negative returns. When equity markets are down, most schemes would give negative returns. In such case, do peer group comparison.

  • Cut down your meetings (other than clients). Hire employees to assist you. Don’t do multitasking. Complete an assignment and then move to another. Prioritize your work.

  • The rule is to reduce risk while targeting higher returns. You should focus more on large cap and multicap funds. Typically, I would suggest to sell 60-70% large cap and multicap funds, 20-30% mid cap funds and 5-10% small cap funds. Yes, mid cap and small cap funds could give better returns in long term but they are more volatile in short term. While your client may invest thinking long term but during market down turn they panic, lose confidence and exit. This is bad for client and your business. So, keeping in mind the behavior of the client, you should focus more on large cap and multicap funds.

  • SIPs are powerful. You should try to sell as much as possible. As a beginner, try to sell atleast 1 SIP every day, 30 SIPs every month, and 300 SIPs every year. If you sell Rs.30,000/- SIP every month (Rs.1,000/- per Day), you can build an AUM of around Rs.30 crores in 10 years. If you sell Rs.Rs.1,00,000/- SIP every month, you can build an AUM of Rs.100 crores in 10 years. All SIPs won’t run for 10 years. So, for every closed SIP you must sell 1 more SIP to compensate for it.

  • If you have 200 clients, you should target a minimum of 800 SIPs. This is because if you are able to sell atleast 1 SIP to your last (200th) client, you can expect to get an average of 4 SIPs per client. This is because your 150th client may give you 2 SIPs, 100th client may give 4 SIPs, 50th client may give 5 SIPs and your top client may give you 10 SIPs. The average will become 4 per client (family). This will result in 800 SIPs. Taking an average of Rs.3,000/- per SIP, your monthly SIP book can be 25 Lacs per month.

  • SIP is a process, not product. The beauty of SIP is that it works with all funds. Historically, midcaps and small cap schemes have delivered higher returns but by nature, they are more risky as compared to large cap and multicap funds. Even if clients assume that they will continue for long term, many of them panic during short term volatility. Therefore restrict allocation to midcaps and small caps. Don’t take 100% exposure in them. Add large cap and multicap funds also.


  • Yes. If you can organise IAPs, your client base should increase fast. The challenge is to make people come for the program. The best strategy is to do it in a housing society or for members of a club or for employees of a corporate.

  • There is no limit and it depends on your vision. However, as a starting point (0-5 years), you should target atleast 50 crores of AUM if you are in Top 15 cities in India and 25-30 crores if you are in beyond Top 15 cities in India. This is just a reference point and you can do better. SIP book should be minimum 1% of total aum. It means; for 25 crore AUM, you should aim at 25 lacs monthly SIP.

  • Reference is the best way to get new clients. Ask for reference in every client meeting. If you are new in the business, create a list of prospects through friends and relatives. Organise investor education and awareness programs. Don’t get disheartened if you are not able to convert all references. If your ratio is one out of two or one out of three prospects, you are going good.

  • Give proper disclosures as required. Tell the client that while the difference could be between 0.50-1.00% pa., but they also need to consider all the value additions given by IFAs. Like, good advice (there are over 3,000 funds to choose from), good service, regular updates and regular reviews. Also, the advice and service is not limited only to mutual funds. Whenever they require any advice on other financial products, an IFA helps them in it. (10th Sep’16)

  • Monthly SIPs are better as it involves lesser number of transactions. Whatever mode you choose, difference in returns may not be more than 1% pa. Also, you cannot be sure that the difference will be positive or negative. If the client is doing more than 1 SIP, then you spread the dates which will take care of further averaging. Some AMCs will show you data that daily or weekly SIPs deliver higher returns. Ignore such data as it could be a case of selective data mining. Keep it simple.


  • You should suggest equity funds with a minimum time frame of 5 years.¬†Historically, Indian equity markets have delivered positive returns most of the time if investors held their investments for 5 years. However, few times it took longer than 5 years. So, to be on a safer side, you should think long term as 10 years.


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