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Edelweiss Insights Common investor queries and how to address them

Common investor queries and how to address them

How to answer difficult questions that clients ask you.
Shreeta Rege Feb 27, 2019

Clients tend to be more sensitive to their investments in turbulent markets than in benign ones. Currently, the sailing is definitely not smooth. Add abundance of information to the mix and you may have clients asking you tough questions on their investments. Here are the most common questions that clients ask and how to answer them.

Why are you selling me schemes of only some select fund houses?

Your clients may wonder why you recommend schemes from a select set of fund houses.

Be ready to explain your rationale. Advisors tend to favor fund houses, which have strong fund management capabilities, are responsive to advisor queries and have robust investment and risk management processes in place. Whatever your reasons, you need to explain them to your clients so that they know there is no conflict of interest.    

Why is my return so low this year? Should I redeem my investments?

After moving up consistently since 2014, the last year (2018) was subdued for equity markets. Investors who entered markets for the first time in 2018, were the worst hit by the correction and their overall returns are likely to be low or negative. Tell such clients why you think this is a temporary correction. Also, explain the rationale through everyday examples.

Advisor Meenakshi Sikchi, Rainbow Financial Services draws similarity from sale to explain to her clients about correction. She tells her clients that just like they can buy more stuff at a sale, market correction gives them an opportunity to accumulate more units at lower price.

Do you invest in schemes that you recommend?

Many investors may want to know if you have skin in the game. Just like you draw comfort from knowing that the fund manager invest in the scheme he manages, clients too feel confident if they see you investing in the schemes that you recommend.

In case you do not invest in those schemes as they do not align with your risk-return profile, explain the reason to your clients. 

Why should I invest with you? Why shouldn’t I go direct?

With a sharp increase in online players offering direct plans and articles talking about how direct plans can save money, many investors are inquiring about them. If your client wishes to go direct, explain to him the value you provide. Identifying client-specific best investment options, regularly keeping tabs on their portfolio, being their voice of reason in volatile markets and providing them quick service are all part of your role. If IFA Jitu Dabaria’s clients ask him about direct plans, he tells his clients the amount they will save by going direct and the services he provides in lieu of that amount. Looking at the value addition, most clients don’t mind the commission.  

What happens to my assets after you retire?

For investors it is important to know that you have a plan in place when you retire or die. Many advisors hand over the reins to their children, some merge their practice with an organization to form a corporate entity while others sell the business. You need to communicate your succession plan to your clients. Also, introduce clients to your successor well in advance to ensure a smooth transition.

If you are still in the process of developing your succession plan, keep the client in the loop.


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