Moat for financial advisers

Bengaluru based adviser Srikanth Matrubai on how IFAs can fight competition by gaining client confidence.
By Guest |  21-02-17 | 
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Morningstar invites thought leaders from the investment community to share their insights. Views expressed are personal and should not be construed as investment advice.

Just like investors have a goal, we too need to have a goal. It could be anything.  For someone new to this profession, it could be a target of Rs. 10 crore AUM. For others, it could be Rs. 100 crore AUM. For another one, it could be even a Rs. 5,000 crore AUM.

For this, we need investors who are committed to us and are not swayed by direct plans or robo-advisers.

The million-dollar question is how to get these committed investors. You will not get committed investors but you will need to create them. In fact, all your existing investors could well become committed investors who will stand by with you throughout their life.

How to create these committed investors?

For this, you need to be different. Different does not mean using better technology, giving amazing reports with all sorts of graphics. All these can be easily replicated by your competitors and even improved upon. But, what your competitor cannot replicate is your personal relationship with your investor.

You need to move beyond providing information. Investors these days are more knowledgeable than ever before. Not just the pink papers, even the regular daily newspapers are carrying personal finance articles.

Here are a few ways of creating committed investors:

Educate your investor

Do not shy from educating your investor. I have seen many IFAs trying to keep information wrapped from investors. Don’t do that. Your investor will get the information, if not from you, from other sources and it could be from your competitor!! I have always encouraged to learn more about not only their investment products but also the entire gamut of the investment world. The investors will start looking to you as their guru.

You will be seen as a specialist but more than that a person who can be trusted, after all, who gives gyan free.

Remember, your client wants to be a "better investor" and has taken your help. And you are truly helping them becoming a "better investor".

 Be a good listener

Investors like advisers who "listen" to them. This will make them feel "valued".

Talking does not improve your business, listening does! Yes. You have been trained to talk all your professional life. But don’t become a data dumper. Instead, focus on what the investor is saying (need). This way you will get a completely picture.  There is no need for you to do all the talking and be seen as an expert. Your work will do the job.

 Develop emotional empathy

Emotional empathy ensures that a great rapport is built with the investor and you as a concerned adviser should be seen as a well-wisher and need to show genuine interest. Understand your investor holistically and show that you do really care. See it from "their" point of view.

Once the investor knows that you truly care, he will give the full share of wallet to you and even refer his friends/relatives to you. He will become a walking brand for you.

Remember, the biggest threat to IFAs according to me will be robo-advisory. And robo-advisory can do anything and everything but cannot replace relationships. This is its biggest disadvantage and we need to make maximum use of this drawback.

Get to know your client’s hobbies, interests, concerns (other than investment, of course) and try to help in whatever possible way. No robo-adviser will do this and if you are able to successfully help the client in getting even one concern solved, the client will be yours for life!

Your existing investor, even if he is a small one, having just a 1,000 SIP, could turn out to be a money-spinner.

The article first appeared in IFA Galaxy Souvenir. It has been reproduced with the author’s permission.  

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Mar 4 2017 08:53 AM
Great. Creation of Trust in the advisor is the only way to expand your AUM. All the points narrated above are 100% true. Thanks for sharing.
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