Many distributors expect slowdown in their business amid coronavirus outbreak. Also, distributors who rely on physical transaction will be the worst affected, believe many individual MFDs.
Mumbai individual MFD Sadashiv Arvind Phene is facing many difficulties due to his reliance on physical transactions. He said that he is not able to meet his clients and collect application forms and cheques due to lockdown. Moreover, he feels that phone calls are not effective enough when you are handling sensitive and important matters such as convincing clients to stay put in the current market volatility.
Further, many distributors have to postpone their SIP drives and IAPs in the wake of the lockdown. This is a setback for the industry as most distributors rely on SIP drives and IAPs to grow their business.
Nevertheless, many distributors remain optimistic that serious MFDs will emerge stronger post recovery from coronavirus. Gajendra Kothari of Etica Wealth Management says, ‘The current situation has certainly thrown up a huge challenge to MFDs. In these testing times, distributors have to prove their worth to their clients by hand holding them.”
Gajendra has been engaging with investors through phone calls and video calls. To gain their confidence, he has also been sending personal notes to his clients that show how he has made additional investments to take advantage of the plunge in the market.
Mumbai RIA Suresh Sadgopan of Ladder7 Financial Advisories is of the view that while many non-serious players who do not engage with clients at this point would lose their business, advisors seen as firefighters by their client would thrive in the medium to long term.
Vinod Jain of Jain Investment also feels that there will be a slowdown in distribution business in the near-term. However, distributors have to step up interaction with clients as there might be a change in their cash flow and risk appetite.
Based on our conversation with these distributors, here are some key messages from top advisors to deal with post coronavirus days
Vinod Jain
Risk appetite will change. Many investors will turn conservative after this
People may increase non-discretionary spend. We will have to encourage clients to pay attention to their financial goals
Sadashiv Phene
Keep in touch with clients at least through phone calls
We will have to educate clients on behavioral biases
Suresh Sadagopan
Serious players will become stronger
Individual MFDs and RIAs are in a better position to handhold clients in times of need. This would work in our favour
Gajendra Kothari
AUA may take a hit largely due to mark to market losses
Need to engage more with investors, demonstrate our value
