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Mutual fund distributors play a major role in helping their clients make their financial decisions. They also help in creating a portfolio for their client where the long term goals of the clients are met. MFDs are professionals who also do due diligence and understands clients' time horizon before investment.
Create awareness
MFDs should integrate a slide in sales presentation on finfluencers cautioning their clients. While finfluencers are likely to focus on short-term returns while promoting a product, a distributor will look at the history of the product and also the risk ability of the investor before investment selection. In other words, MFDs should make investors understand that if they have long-term goals, they need an advisor who can help them achieve their goals.
MFD Viral Bhatt of Money Mantra, Mumbai says, MFDs should help their clients understand their time horizon and level of risk-taking. "After watching a video, a client approached me and inquired about investing in a small cap fund. I helped the client understand that a small cap fund would not be appropriate as per his/her goals. In addition, I informed the client that despite the fund's favourable returns, it was not appropriate for long-term objectives.”
According to Viral, the best method to explain something to a client is to provide facts.
Be visible
One-on-one interactions can help MFDs understand the client's requirements and can boost their relationship with clients. MFDs should keep updating their clients about market developments by staying in constant touch with the clients. The MFDs should seek information from their clients about their financial status, investment experience and investment objectives.
RIA Bhanu Prasad, Andhra Pradesh says, we should tell our customers that the finfluencers video they watch is likely to be transient in nature, focusing on the flavour of the day, on the other hand, MFDs are focussed on more substantial issues. Citing an example, she said, “A client approached me and mentioned a video he watched from a fininfluencer, I explained to him that the portfolio I chose was based on his risk. Before creating your portfolio, I take volatility and taxes into account. I also show his portfolio's historical returns.”
Further, he added, "I will advise the client to opt for another RIA over finfluencer if the client continues to argue about the same."
Showing authenticity
MFDs can highlight how they add value to investors. MFDs create value in terms of time, place, and information and can help investors make better decisions from thousands of schemes. For their clients, MFDs design a complete portfolio that spreads the risk. MFDs can highlight their qualification and certifications and also inform the client that they hold an AMFI registration number and are registered mutual fund distributors.
MFD Deepak Khemani, Mumbai believes that MFDs should showcase investment portfolio of their clients to reinstate trust. “If existing clients come to me with finfluencer queries, I show them their investment portfolio and tell them how we shortlist schemes for them. I also tell them that chasing the current outperformance does not guarantee future performance.”
Pune MFD Sandeep Bhushetty of Chatur Investments believes distributors should advise customers to read the full description of the product and category in the video and compare it with online information. " If a customer shows me a video, I evaluate the product and determine whether it is intended for long- or short-term use. I also see the product and whether it fits the objectives of the client.”
Ashish Modani of SLA Financial Solutions says, you should let someone do what they want rather than trying to stop them. "If a customer contacts me and mentions the finfluencer video, I will let the customer invest in that scheme. My clients have come to me after realizing the error they made by investing without any guidance.”
MFDs provide knowledge, information and ideas about financial products to their clients. MFDs should be ready to provide any document to their client whenever they require it and should build a good relationship so that the investor does not feel left out.
