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AMFI data shows a substantial increase in SIP discontinuations over the last few months in the MF industry.
One reason could be panic exit during market correction due to speculation and fear of loss. As trusted investment guides, MFDs are uniquely positioned to guide clients and help prevent panic selling. But how do they do this? Cafemutual spoke to some of the most prominent names in the distribution business to understand their approach in keeping clients invested during market volatility:
Kolhapur MFD Sanket Awate believes that goal-based approach and imparting market knowledge during client onboarding are useful to avoid such panic selling. In fact, he recommends to his clients that they should do lumpsum investment during market corrections. He also explains to his clients that stopping SIP and redeeming won’t help them unless they need money for an emergency.
Dharwad MFD JB Sudarshan believes that trust and emotional engagement with clients are necessary for MFDs to ensure that clients listen to your recommendation during moments of such panic selling.
Sudarshan believes that consistent follow-ups, goal tracking, and regular communication through articles, quotes and data on the benefits of long-term investing can help convince impulsive clients to stay the course.
Mumbai MFD Nikhil Kothari of Etica Wealth showcases real data to highlight how market corrections help investors accumulate more wealth. The MFD has released a report for his clients on the benefits of long term SIPs.
Chandigarh MFD Rajeev Kathuria uses news reports and data to show his clients the strength and growth of the Indian economy. He also shares SIP performance data to encourage them to focus on their long-term financial goals. He motivates clients with a powerful analogies urging them to be like a horse with blinders, focusing solely on their target and ignoring distractions.
Summing up
- Educating clients early builds resilience during market volatility
- Goal-based planning helps clients stay focused
- An emotional connection with clients increases your acceptance
- Regular communication and follow-ups reinforce investment discipline
- Data and real examples help build credibility and confidence
- Highlighting economic growth and SIP performance reassures investors
- Using analogies (e.g., horse with blinders) can effectively motivate clients
