Shaken by the loss of MFDs in the mutual fund industry during the pandemic, Philip Cherian, President Kerala Association of Independent Financial Advisor (AIFA) and Jagadeesh R Pai, General Secretary AIFA have recently organised a session for members of the association, which was delivered by Rajesh Krishnamoorthy, Country Head, FPSB, India.
The session was named, ‘Who after me?’ which aimed at helping members get clarity on business succession.
Philip shared the key highlights of the session with Cafemutual for the benefit of the entire MFD fraternity. Here are the key points that can aid a smooth succession of business.
- Training family members
If your family members have a keen interest in the mutual fund business, you can start imparting them training on MF distribution business. Regular training and upskilling makes them ready to manage your client base effectively. It is important to introduce them to your clients and involve them in meetings.
- Bringing together like-minded people
Sole business owners can contemplate collaborating with like-minded people for exploring a business merger, formation of partnership firm, company, etc. It is important to look out for complementing skill sets, similar business philosophy and the quality of client base handled by each sole owner. The terms and conditions must be clearly outlined in such transactions.
- Knowing the value of business
Before selling owned business to others, it is vital to know its correct value. Valuation is influenced by multiple factors like quality of client base, data hygiene viz a viz KYC compliance, revenue potential, assets under management, etc. The asset base is created after putting in a lot of hard work and efforts and must be negotiated for a fair deal.
- Keeping data clean and handy
Client data must be clean i.e. the client base must be KYC compliant. Further, all data must be segregated and well-organised in one place. This helps the successor have a better hold over the business resulting in a smooth transition. It additionally ensures that the clients are served in time.
- Informing clients about the succession
The clients must be kept informed about the succession plan. This builds a sense of long term financial security in them. Introducing the successor and breaking the ice between them gradually makes the client comfortable with the successor.
