Mr. Advisor, here’s what your clients tell us

At PersonalFN, we write extensively about all things that affect your personal finances. Right from a comprehensive analysis of the RBI’s monetary policies to an in-depth note on New Fund Offers (NFO), PersonalFN shares its perspective straight up. What matters most to PersonalFN is Ethical Advice. This is precisely why we have lambasted dishonest and unscrupulous advisors in instances where the client’s interest had been compromised. However, many a times in the past we haven’t reached out to advisors directly.

Lately, PersonalFN has realised that educating advisors is as important as spreading awareness among investors. Our vast experience in dealing with clients to resolve all their financial related grievances makes investors comfortable enough to speak their hearts out with PersonalFN financial advisors. And, we are listening, intently.

These are two worrying observations:

  • Many investors share that an XYZ financial planner / investment advisor / mutual fund agent / insurance agent has cheated them in the past.
  • When financial planners at PersonalFN look at the investors existing portfolios, they clearly note many unwanted products lying unproductive.

As a neutral observer, PersonalFN believes many advisors lose business because clients fear they will be cheated again; even though they are ready to pay for advice. They just have a singular earnest expectation they want genuine advice.

It’s a wakeup call for advisors who might have used an armoury of shortcuts to achieve their targets until now. Perhaps, you’ve even won contests held by an insurance company, or/and been honoured by a mutual fund house for pushing their NFOs aggressively. But if you look at the ground reality, your disillusioned client has started keeping you at arm’s length. This part might be even more painful for you.

Now, the very insurance company that showered you with prizes and false glory doesn’t entertain your calls when you contact them for back-office assistance. Their reason? You have fallen behind in the race to achieve targets. As remains the question of mutual fund houses, they pay you less for promoting a performing fund but fill your pockets with money for promoting a mediocre fund.

You are losing business, you are losing clients, and the worst part is you are earning a lot of bad publicity instead.

More revelations….

Vanguard & Spectrum Group did an interesting survey titled: ‘Today’s Affluent Investors: Insights & Opportunities’.

They posed an interesting question: “What are the factors considered when selecting a new advisor?” was asked to 3 segments of investors (i.e. Mass Affluent USD 100,000 to USD 999,999; Millionaire USD 1 million to USD 4.99 million; and Ultra High-net-worth (UHNW) USD 5 million)
(Amounts mentioned based on their net worth)

Sr. No Parameters Mass Affluent Millionaire UHNW
1 Honest & trustworthy 94% 95% 97%
2 Provides transparency & keeps me informed 91% 92% 93%
3 Advisor’s investment track record 90% 92% 91%
4 Fees or commissions charged 81% 82% 84%
5 Strong referral from a trusted associate 74% 68% 69%

(Source: Vanguard & Spectrum Group)

Please don’t be under the impression that Americans want their financial planners to honest and Indian investors are okay with dishonest planners. The world is really small. If you lose trust, you will lose business very fast.

PersonalFN hands you 10 quick tips to help you regain the confidence of clients and save your business:

  1. First and foremost, be ethical. That will solve 80% of your problems.
  2. Always keep your client’s interest ahead of yours.
  3. Don’t try to push products, rather give unbiased advice
  4. Drop the Mr. Bolbachan act; speak sensibly and realistically; hold back any false promises.
  5. Touch base with your clients regularly and keep them posted on important developments that affect their finances.
  6. Don’t turn your back on investors under bad market conditions; this really hurts them
  7. Follow High standards of reporting and disclosure norms
  8. Be open on the compensation model you follow
  9. Ask for client’s feedback
  10. Be attentive to customers and value their suggestions

Ethics isn’t optional. Rather, ethical practices and ethical code of conduct are two prerequisites for building and sustaining a long-term business in any industry. The time has come for all ethical advisors to unite on a common platform to save the industry from falling into the hands greedy, dishonest advisors.

You are not alone, dear advisor, share your views with us

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