Investor centricity is the key to success

Nilesh Shah, MD, Kotak MF shares four success mantras for advisers to grow their business.
By Guest |  21-03-17 | 
No Image
About the Author
Morningstar invites thought leaders from the investment community to share their insights. Views expressed are personal and should not be construed as investment advice.

Investor centricity is the fundamental engine of our business. In my career and through my experience, I have come to realise that the theory is only as good as the creative practise that you can bring in to bear. It is in the earnest execution of your work that you can deliver your quality of service, trust, communication and knowledge to the investor. I have observed that the innovative practises that many successful distributors have developed in scaling up their business can be broadly categorised as, activities for a) client acquisition, b) client penetration, c) client delight and d) client mindshare.

 Client Acquisition

 It is important that the distributor develops the mental strength that makes them derive positive motivation from refusals or challenges. Distributor’s constant reach and communication with prospective investors will increase their chances of converting the savers into investors.

 I know an independent financial adviser (IFA) who makes it a duty to visit the hospital at the time of baby’s birth in his community to ensure that the new father commits himself to lifelong investment for the baby’s welfare through SIP: be it for education, marriage or foreign studies. Similarly, another prominent IFA has made it a cause to visit the happy occasions of his clients and their families, such as marriage or house-purchase etc and signs them up for retirement planning solutions or saving for long holidays etc. What is common is that a distributor is working to transfer the investors’ commitment of that happy occasion into a tangible financial goal that will prolong the essence of that event.

 I have had the opportunity to visit many investor meets organised by IFAs. I have observed that the best follow-through a distributor can do henceforth is to provide for a closure to the investor. This can be done by as little as providing an investment form to fructify the advice. Then there is a need to reach-out to the underserviced demographics and/or professional groups such as the army, police and paramilitary.

Digital outreach is another important activity through with the distributor community may reach-out to the investors and implement product awareness, sales, aftersales, communication etc. It also matters where a distributor’s office is located. More often than not, a retail investor oriented distributor may be better off, if the office is located on the ground floor rather than the 5th floor. The situation reverses if the clientele is primarily HNI.

Positive testimonials from your prominent and reputed investors in the local community would also go a long way in establishing presence and preference in minds of other potential investors.

Investor Penetration

This is perhaps the most important aspect if one is looking to scale up the advisory business. For this, a distributor needs a long-term relationship with the investor and ownership and concern for his/her investment plan. You as a distributor must make your clients follow the plan rather than let them ride the emotional see-saw that comes with market ups and downs. Specialise in the product niche that your investors seem to be liking but have a diversified portfolio across the management style (value, growth, contra, momentum). In one instance, an IFA helped his investors pursue their mutually shared hobbies more vigorously and was able to create a bond built on trust and sense of belonging.

Investor Delight

The quality of service and advisory is vital in ensuring repeat investor engagement. Just as a Fund Manager picks stocks to generate alpha, the IFA must show similar due diligence in short listing and selling the funds. Their advisory choice must be future looking rather than be driven by short term incentive or past performance of the fund. There are prominent IFAs whose fund advisory list is so sacrosanct to them, that nothing will make them operate out of it, other than the conviction that there is wealth creation potential in other prospective fund. This forward looking performance outlook creates a long term wealth for investors and a sense of loyalty towards the IFA.

Strive for Investors Mindshare

As a distributor, you must also be able to pin-point the value of your advice and the opportunity loss if the any of the investors missed out from acting on it. Ring fencing your investors by selling unique propositions and funds that are otherwise not easily analysable by google-oriented investors or competitors too is beneficial. Presence and availability of distributors on the investors’ hour of preference also seems to have a high recall with clientele. For this purpose, the distributor needs to develop flexibility of work, location and time. Also, your advisory must have a larger purpose of giving and adding back to the society by as little as helping even the marginalised saver in joining the market. This will develop respect amongst investors for the distributor.

Our industry is poised towards steep growth as demonetisation helps stimulate financialisation of cash savings. It would be up to the distributors as to how they are able to bring about a change in the mind-set of these new investors to change their savings and investment habits. Accumulation and implementation of best practises will help create a brand image that would attract these new and old investors; and provide fresh thrust to your advisory business.

This post initially appeared in the India Markets Observer 2017 where you can read the perspectives and views of other experts too. It is available to all for FREE. All you need is a minute to register. 

Download your copy Now!

The views are personal and not necessary those of the organization the author represents.

Add a Comment
Please login or register to post a comment.
Shambhu Nath Sah
Mar 22 2017 08:31 PM
Great insights to serve the customers indeed.
Mutual Fund Tools