In any relationship, the first encounter or meeting plays an important role. As they say, ‘First impression is the last impression’. That is why experienced bosses emphasise on the need to orient their new team members and the traditional Indian ‘bahu’ works hard to win the hearts of her new family.
Similarly, it is imperative for advisors to set the right expectations in the minds of their prospective clients before onboarding them. Ensure your clients have the right expectations – on returns, risk, costs, time horizons etc. so that you build up a productive long term relationship with your clients.
Here are a few tips which could help you establish the right wavelength with new clients:
- The first and foremost question any advisor needs to ask a new client is that why does he/she want to invest? This will help you understand the goal of the client. If clients say that they don’t have a goal and are just looking for ‘high’ returns, you could set a target for your clients to achieve, say Rs 10 lakh in 3 years, 15 lakh in 5 years, etc., which will help investors focus on achieving a target amount. Some fund houses have developed tools for target based investing which automatically shift money from equity to debt and vice-versa if certain threshold limits are triggered. (e.g. Franklin Templeton’s Family Solutions, My Target Value Savings Account by DSP BlackRock, ICICI Prudential Target Returns Fund, etc.) Once this target amount is achieved, clients can decide for themselves what to do with their money. Fund houses are also trying to inculcate a long-term investing habit in investors through goal based funds like children plans, retirement plans, marriage plans, etc.
- Since the entry load ban, many advisors have been trying to get their clients pay for their services. While some have succeeded, many others are still trying. Many advisors had not factored in that such a situation may arise (entry load ban). From now on, advisors should tell their new clients that they render their services for a fee.
- Advisors need to find out the time horizon for which clients want to invest. This will help you do the asset allocation properly. As advisors normally recommend equity funds if the client’s time horizon is longer, problem could arise if investors are risk averse in nature. It is important for you to educate them about the vagaries of stock markets so that they don’t land up, agitated and nervous in your office if markets crash.
- Communicate your or your company’s values, policies, method of operation, etc. to prospective clients.
- Treat it as a relationship and not transaction.
- Don’t overcommit and always give realistic projections.
“Goal setting is very important before taking any client. One needs to ask if they are looking for a solution or product. In the absence of a goal, clients will keep asking you about their funds valuation. First meeting is usually an ice breaker,” says Rajesh Hattangady of THiiNK.
Even if you are not offering full-fledged financial planning services, it is always advisable to gather some basic information like client’s risk-appetite, goal and time-horizon before deploying investor’s money.
Tell us what you tell prospective clients before onboarding them.
