Often when it comes to wealthy clients, we all have some misconceptions such as you always need a reference to approach wealthy clients and HNIs only associate with big brands. Karan Bhagat, MD & CEO, IIFL Wealth busted these myths at Cafemutual IFA (CIFA) 2019 and shared his four mantras to manage wealthy clients effectively.
Sharing instances from his initial days, Karan revealed that his first four HNI clients were not acquired through references but through cold calling. In fact, he identified wealthy individuals by looking at their house size in Delhi. Even today, he fondly recollects his initial clients by their addresses. He used this example to explain that ‘Contrary to popular advice, you do not always need references to approach wealthy individuals’. Second, he revealed that wealthy individuals were not always brand conscious. In 2001, clients in Delhi confused Kotak with Kodak. Even today, their clients mix up IIFL with IL&FS, shared Karan. His message to advisors through these examples was ‘Brands continue to grow, focus on your proposition rather than brand’.
Karan advised advisors to look at opportunities in the industry. Sharing an interesting statistic, he said, “Every week, even in challenging markets like the current ones, there are at least eight transactions, which bring in new money into the wealth management fold. By the new money, I mean land sale, equity stake sale i.e transactions, which bring Rs. 50 – Rs. 100 crore of fresh money.” He urged advisors to tap this new money.
Karan’s four mantras for dealing with wealthy clients
- Clients are smarter than us: Always be transparent with your clients. If you do not share information like direct plans with them, eventually they are likely to find about it and that may spoil your relationship with your client.
- Wealthy clients mainly aim for wealth preservation than wealth creation: Often these clients want to preserve their purchasing power. That is earn returns of around 10%-12% on their investments. Clients will be happier if you help them get such returns with minimum volatility.
- Show that you care: Wealthy clients want to know that you are easily accessible and care about them. One way to show that you care is remembering the client’s portfolio by heart.
- Convert product based relationship to advise based relationship over time: A client is unlikely to take investment advice from you in the first few interactions. Start with selling products and slowly transition it into advice-based relationship as their trust grows.
