Reports of naïve investors who have been duped are plenty, and that’s precisely why investors do not trust Independent Financial Advisers (IFAs) today.

But, one needs to recognise that trust is earned over a period of time by doing what’s respectful and moral. And investors are cautious at every step. After all, it’s a matter of their hard-earned money.  

With so much competition in the industry today, and even banks eyeing a share of the pie in the wealth management space, the environment is getting quite challenging. Everyone is claiming to provide the best advice, best service, and offering a delightful experience.

In such a scenario, how do IFAs stand out and earn the respect and trust of investor/clients?

Well, one of the quintessential ways of doing this is by providing prudent, unbiased, and ethical advice, wherein the interest of investor/client is put at the fore at all times and their hard-earned money is handled with utmost care recognising their needs, risk profile, investment objectives, financial goals and the time horizon before goals befall.

This judicious approach can help IFAs gain the confidence of investors. And if they are handheld with empathy and care, while you render solution-oriented advice in their journey of wealth creation, it can be a win-win and earn loyalty, respect, and trust of investors/clients. They may even recommend the services to friends and family members and help IFAs build a business on goodwill.

Here are a couple of aspects to understand the relationship between an IFA and the investor/client:

  • What clients expect

Understanding each other’s expectations is the most basic requirement in any relationship. And when there is money involved, the expectations are much higher.

Clients/investors expect their IFAs to understand their needs so that they receive ‘personalised’ prudent advice. Imagine going to a doctor who gives a prescription without taking cognizance of the patient’s physiology and medical history ——the results would be disastrous!

Likewise, IFAs need to ensure that their client’s financial health is not at risk. Understanding the investor’s/client’s financial history, present circumstances, and his/her financial goals well are important.

Another important factor is to understand the investor’s/client’s risk-taking capacity and accordingly recommend investment avenues that will enable him/her to accomplish the envisioned financial goals. Everyone likes to feel special, and for that, IFAs need to provide personalised/customised advice to clients.

Plus, setting realistic risk-return expectations from an investment avenue is fundamental to the role IFAs play.

IFAs should refrain from pushing products, which can make investor/clients uncomfortable. People do not like being sold; rather they like to make their own decisions to buy recommended services and products.

Also, as far as possible when products are explained and investors are counselled, financial jargons should be avoided. IFAs should explain it all in as simple terms and avoid beating around the bush— communicate clearly! 

IFAs also need to educate investors/clients about the processes, the policies, and the procedures. Most investors are ignorant about these things and therefore look for professional help to guide them through the complicated maze of personal finance.

Remember, investors/clients expect IFAs to be sincere while handling their money and the relationship.

  • What do clients appreciate

Investors/clients expect their IFAs to be transparent and open. So, IFAs need to follow the best disclosure norms. At PersonalFN, we’ve always followed the best disclosure practices, been ethical, empathetic, prudent…and that’s helped us earn the respect of several clients.

Show willingness to resolve client’s/investor’s queries; if IFAs voluntarily take efforts, it will go well-appreciated. The after-sales support and offering value-added service are pivotal in the advisory business today.

Clients/investors will ultimately value the advice of IFAs only if it compensates him/her well. For this, it essential for IFAs to provide research-back solid advice, do need-based analysis, counsel investors prudently, attend workshops, and keep themselves abreast with the latest trends and developments in the industry.

Remember, clients/investors will always appreciate the rationale behind the advice of an IFA, after sale support, the level of engagement, and transparency.

  • How to build trust  

Trust is one of the most written about and researched topics because many of us have been betrayed,” says David Bedrick, a practising psychologist.

He’s gone on to add that betrayal has two parts:

  1. Violation of a spoken or an unspoken agreement; and
  2. The resultant injury

Cultivating trust is a process. It cannot be built in a few days.

For IFAs to earn trust, placing the investor’s/ client’s interest first and following high fiduciary standards at all times is essential.

Also, going beyond the purview of the law and acting on moral grounds in the best interest of investor/clients will gain IFAs trust and goodwill. So, beat the stereotype.

An IFA needs to be like a ‘Financial Guardian’ or a doctor, patiently addressing the queries of his patients to their satisfaction. Remember, patience is a virtue!

To sum-up…

IFAs can perhaps buy leads to grow their business, but for investors/clients to stick around for the long term, it is important for IFAs to build a relationship founded on ethics and prudent business practices.

Remember, building trust and gaining the respect of investors/clients is a process; IFAs need to earn their goodwill. It will not happen by chance, you have to consistently be there for them throughout their financial journey and make a conscious effort.

To grow your financial advisory business to the next level, become a “Certified Financial Guardian” today!

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