We all had a great time till 2008 before a slew of regulatory changes started coming our way. These measures caused disruption and forced many of us to change our business models.
I remember whenever I had broached the possibility of end of entry load, many IFAs were convinced that it would never happen. But soon, one after the other, many disruptive changes came of the magnitude that one had never imagined.
However, even now people continue to remain in denial mode and events keep taking them by ‘surprise’. One such change is ‘Direct’. All the previous changes brought our revenue per client down, forced us to cut down expenses, defer expansion plans and so on. But ‘Direct’ snatches the entire AUM of the client without giving a chance to adjust or to do the repair work.
We all know that the client needs advice. While investors may save some cost by going direct, when a client needs hand holding and empathy, this may look like ‘penny wise pound foolish’ decision. But it may be too late for both advisor and the investor.
While many of you have been advising for years, even if it is incidental, very few of us may have articulated to clients that how much effort goes in understanding the needs of the client, fund selection, making the client stay to her goals irrespective of the market movement, having conviction, keeping them away from Ponzi schemes, to name a few.
People have two options to handle it, first being, live the life as it comes and don’t bother. For example, Indian cricket team took Bangladeshis very lightly and ended up losing the one day series. One may get defeated to ‘Direct’ in one day if he/she is not prepared and the second option is to prepare yourself for the questions that may come into the minds of existing clients as well as prospects.