Vinayak Sapre of Insights gives practical advice on how advisors can grow their SIP book irrespective of where the market moves.
2014 was a truly remarkable year in many ways - be it single party winning elections after 30 years, launch of Mangalyaan, market rally, mutual fund AUM crossing Rs. 11 lakh crore mark etc., to name just a few.
If markets do not replicate the kind of returns which we saw in 2014, the challenge for advisors would be to grow their business irrespective of how and where the market moves. One of the smartest ways of growing business is to grow your SIP book.
Let us look at some ways how you can grow your SIP book.
One of the first things you should do is to identity your target clients. Look at your database and identify clients who can start fresh SIP and STPs. One of the obvious segments is salaried individuals because their income is predictable and regular.
To start with, make a list of your top 20 clients and segment them in two groups (salaried and businessmen). After segmenting, update your data i.e. try to gather maximum information about your clients. For instance, family size, income, liabilities, if self-employed or businessmen - best months of business, if salaried then increment period, bonus/incentive month etc.
The insights gathered from your data will help you in approaching the client at the right time. You should be able to spot the behavioral changes of your clients. Often it happens that one may miss out on observing small changes in their hobbies and taste even in spite of knowing clients for many years.
Secondly, pull out the list of the clients who have been doing SIPs for the last seven to ten years. If that list looks small then add clients who used to do SIPs and discontinued midway but didn’t redeem. If the list still looks small, it’s not a bad idea to take the list of clients who discontinued and redeemed. Clients who have continued their SIPs are the happiest lot and should easily be ready to top up their SIP installments. It is fair to assume that clients who discontinued but did not redeem also should be among the happier lot. However, you need to make your clients understand about the lost opportunity.
For clients who do small ticket SIPs, you would do well to recommend them ‘SIP top up facility’ offered by some fund houses. It will inculcate the habit of increasing the SIP amount as the time progresses. For instance, assuming that a client’s income grows by 10% annually, adding SIP of Rs. 500 or Rs. 1,000 to his SIP can work very well. It’s a win-win situation for both clients as well as advisors.
Now, we don’t know whether markets would sustain their past performance. Advisors should choose a path which is not dependent on markets. Clients who were market sensitive and didn’t continue or redeemed their SIPs, lost the opportunity and so did the advisors.
To avoid such a situation, each SIP should be mapped to a particular goal and in every review meeting the emphasis should be on achieving the goal rather than discussing the market movement, which is not in your control.
All the things discussed above are realistic and can be implemented. You can avoid the past mistakes if you have a very strong conviction that patience pays. You should be able to convey the same message to your clients as well.
Wish you all a very happy 2015. Make the most of it.
Vinayak Sapre runs Insights, an advisor coaching firm.
The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.