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Business Development What to do when your clients ask about direct mutual funds

What to do when your clients ask about direct mutual funds

Here is how advisors can encourage clients to continue with their services.
Kanika Bhargav Jun 3, 2018

Direct plans have been around for over 4 years now.

Ever since their introduction in January 2013, direct plans have seen a steady rise in investor interest. Direct plans were introduced for savvy investors who know how to invest in mutual funds independently. But today, in the quest to save commissions paid to financial advisors, many novice investors too are inquiring about direct plans.

Have your clients asked you about direct plans? You need not fret; Team Cafemutual spoke to a few financial advisors on how they encourage their clients to continue with their services. Let us read what they have to share.

Value added services

As an advisor, your biggest advantage is the one-stop-shop nature of your business.  Speak about the variety of services such as taxation planning, insurance planning and succession that you provide them under one roof.

Shifali Satsangee of Funds Vedaa feels that making clients realise your value added services helps to retain them. “When my clients tell me that they are planning to go direct, I tell them that I will be happy to assist them with the transaction aspect of direct plans. Also, I make sure to inform them that I will not be advising them on their investment portfolio or provide any value added services such as tax planning and comprehensive financial planning,” she adds.

Be transparent

Shifali believes that advisors should speak about direct plans in the first meeting. “While onboarding my clients, I tell them about direct and regular plans. This helps them choose a suitable investment plan right from the beginning. It also helps avoid any future misunderstanding,” she says.

Speak about your role

As an advisor, you know your clients better than anyone else. You understand their needs, goals, risk, and investment horizon. Show your clients how well you know them and how you can be accessible to them 24x7.

Vinod Jain of Jain Investments says that he convinces his clients not to go direct by highlighting the value he provides. “Even if they have capital, they still need a coach to guide them. I tell them that investing 100% of your capital wisely is more important than saving 50% of it. Cheaper is not always the better option,” he says.

Prathiba Girish of Finwise Personal Finance Advisors believes likewise. She tells her clients that unless they possess a thorough understanding of mutual funds they have no option but to enlist the help of a mutual fund advisor. “I tell them that I not only manage their finances but also ensure that all their financial decisions are taken rationally and shield them from behavioural biases,” she adds.

Rajat Dhar of Cogent Advisory said, “Along with helping a client make right investments, an advisor also plays the role of a coach for their clients on how they can achieve financial goals.”


Speak about your fees

Khyati Mashru of Plantrich Consultancy says, “I tell them that they can opt for direct plans but if they want me to manage their assets, they will still have to pay my fees. In addition, I inform them of the benefits of continuing my services.”

Personal touch

Investing through direct plans is devoid of personal touch. The client needs to source data from the web to understand which funds are suitable for him/her. By providing your clients with tailored, personalised solutions, which address their needs, you gain an advantage over direct plans.

Rajat mentions that an advisor suggests a financial product to a client only after a holistic understanding of the client’s background, risk appetite, long-term and short-term goals. Additionally, the client can relax knowing that the advisor will always be present to address all queries and doubts.

Hiten Shah of Hiten Shah Financial Advisors says, “I tell them about the benefits they have if they stick with me. For instance, I explain to them how an advisor reviews and manages the portfolio which an AMC person will not do.”

Click to clap
Ajay Kumar Jain · 4 months ago
As an advisor, I try to describe them the difference between DIY means direct plan and regular plan. One HNI client asked me the difference between the two. I simply explained him that an advisor only can save you from PANIC and EUPHORIA.
Most of DIY investor loose at the front of alfa generation. Due to euphoria they get out of investment before real profit they could have and get in panic within smaller shortfalls even though it was not required.. In fact an advisor has to behave like a doctor who keeps his patient calm down in any case.
So it is very important for an advisor to keep communication in every market condition and help them to take fair decision, instead of imposing our decision on them.
We can use some stories may or may not be real, of some successful investors who followed their advisors advice.
Most of the investors do some mental maths and can't go beyond that and take decision accordingly. PayTm kind of companies are trying to highlight this mental maths and lure investors by like they can save on this much in 40 years or so. Only we advisors can save them from this mental maths.
Antony Trackfinder · 4 months ago
You penned well, but not aggressive enough.
I take this subject head on like a raging bull with a series of embarrassing questions to the clients.
1.When was the last time you read Medical Journal before giving medicine to your kids and Mom?
2. You wont be traveling by aeroplane, i suppose? Because learning how to fly a machine is tough.
3. Except my smile, everything is chargeable, my platform @njwealth provides everything in one window. You want 1 App or 7 Apps to monitor your wealth?
4. Pay and Demand for service or without pay you want service?

Still they insist, I give them my list of 100 funds i advise to clients.This makes them surrender at the valley of a mountain.
Kamal Garg · 4 months ago
I agree with the arguments and analogy. The only problem here is that Indians are not used to have a hard hitting, direct and up in the eye kind of conversation like "Except my smile, everything is chargeable".
ARVIND THAKUR · 4 months ago
Yes, definitively, why not?
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