Ring Ring. “May I speak to Jayesh? I am Kirtan, Mr. Shah has given me your reference. I wanted to understand about how you can help me with the surplus money which I have recently deposited in my bank account.”
Such conversations have become very frequent over the last few days, say the IFAs with whom we spoke about on the impact of demonetization. Thanks to demonetization, the Indian banking system is expected to receive over Rs. 7 lakh crores, as per newspaper reports.
With interest rates offered by banks nose-diving (and expected to slip further), many investors may seek professional assistance of advisers to park their surplus savings to get better risk-adjusted returns. This offers the perfect opportunity to increase the Mutual Fund pie.
Meet as many people you can, advises Belgaum-based Datta Kanbargi. Ever since demonetization was announced, Datta’s phone has been ringing continuously. In fact, he has started working for almost 14 hours a day since November 8.
Kanbargi feels that this is the time for IFAs to reach out to investors and strengthen trust. “We are working as much as possible to ensure that people do not suffer due to this move. Many people are worried about their cash holdings and have a lot of misconceptions. In fact, they are of the view that holding cash is similar to holding black money which is not the case. Also, we are getting queries on parking surplus money for better returns. My business has grown reasonably in the last 20 days. I think IFAs should push their limits and try to help clients channelize their surplus cash properly.”
Mumbai based advisor Jayesh Parekh is also getting such calls these days and he is optimistic that the surplus money lying in bank accounts will flow in MFs. He says that many people have shown interest in mutual funds. He believes that these people will invest in mutual funds once they understand that mutual funds provide superior risk-adjusted returns than bank FDs.
Currently, Jayesh is recommending liquid funds against saving accounts and FMPs against FDs to people who have surplus money. Also, he is suggesting balanced funds to investors who have a slightly higher risk appetite. “The money which is deposited in banks post demonetization is short term in nature so we are recommending liquid funds and ultra-short term to our clients. However, we are also recommending balanced funds to clients who are willing to take risks. So far, we have received a business of over Rs.10 crore post demonetization.”
Goa based advisor Jennifer Mendes prefers one-on-one meetings with clients and prospects who have queries on demonetization. She is of the view that meeting with clients personally helps her understand the financial situation of her clients better. In fact, she believes that this is an ideal situation to deepen her engagement with them.
Jennifer is actively asking her clients to ask their friends and family members to reach out to her. “I have communicated to all my clients that we can help people understand demonetization better and how they can park their surplus money in financial markets. The response is good and I have been getting a lot of prospects through this strategy.”
IFAs can also look at setting up a help desk to address queries related to demonetization. Baroda based Gaurang Thakkar is of the view that advisers should start a help desk in their office to help people. “Many advisers must be getting a lot of queries on demonetization. I believe IFAs should create a help desk in their office to resolve such queries. In my view, it will help IFAs engage with clients and prospects better.”
In fact, Gaurang is looking to increase his team size to tap this opportunity. He expects that demonetization will give a fillip to the mutual fund industry and hence advisers should be well-equipped to cater to this demand. “People will start investing in mutual funds but it will take a little while before the dust settles down. Advisers should equip themselves with knowledge and hire people to provide better services to the people.”
Yet other advisers have turned in to tax gurus. Take for example Umesh Shukla who has started counseling people on tax. This strategy is helping Umesh gain popularity in Valsad. In fact, Umesh says that he has been witnessing an increase in the number of walk-in clients ever since he started advising people on tax planning. “Many people want to understand the tax implications of the surplus cash they are holding. In my view, this is a good time for advisers to position themselves as tax experts. It helps you generate new leads. But don’t talk about products because it may sound like you are pushing your agenda. Also, if you don’t have expertise in tax planning, try to tie up with CAs to help people.”
Here are some points we distilled from our conversations with IFAs which can help you make the most of the business opportunity demonetization presents for mutual funds:
ü Set up a help desk to resolve queries related to demonetization. This will help you expand your network.
ü Spread the word among your clients that you are keen to help people having surplus cash post demonetization. This will help you get access to prospects.
ü A lot of people have misconceptions related to the tax implications post demonetization. Try to help such people with taxation. You can tie up with CAs to provide this service.
Do write to us with how demonetization has helped your business, and how are you tapping this opportunity.