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Guest Column ‘Ethical selling can help distributors build trust among clients’

‘Ethical selling can help distributors build trust among clients’

Investors expect honesty and transparency when they approach financial advisors.
Jimmy Patel Dec 9, 2018

Douglas Adams, an English writer, humourist and dramatist once said, “To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.”

As an investment planner and advisor, it is imperative to distinguish yourself from the crowd by standing for honest and ethical advice. This is because investors, in general, are fed up of the rampant mis-selling tactics.

Trust can only be built on the foundation of integrity and perhaps, that’s the way to carve a niche and grow in the financial advisory business.

Unfortunately, unlike doctors in the medical profession, there is no oath taking or swearing-in ceremony for investment advisors and if there is one introduced in the future, it would have to be adhered to wholeheartedly.

Investors expect honesty, confidentiality and transparency when they approach those financial advisors who follow the best disclosure norms.. Furthermore, they expect financial advisors to understand their needs so they can receive ‘personalized’ prudent advice.

Imagine going to a doctor who gives you a prescription without taking cognizance of your physiology and medical history, the results would be disastrous, right?

So, adopt the best business practices and high fiduciary standards. And one way to do it is through ethical selling. Ethical selling implies suggesting ideal asset allocation choice for an investor based on his risk appetite and age. This includes asking right set of questions, listening to clients, examining his financial situation and offering a solution that your clients can understand.

However, this is not as simple as it sounds. Advisors would need excellent communication and listening skills. Also, you need to probe clients as at times, they do not open up. You will have to provide them solution in clear and logical way. To help IFAs hone such skills, we have come out with a platform called Quantum Cosmos to give insights on ethical selling to establish trust among clients.

Jimmy Patel is the CEO of Quantum Mutual Fund.

The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.

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2 Comments
Prashant · 1 month ago
With all due respect I agree with all that you have written but we IFAs have not missile at all but banks and AMCs themselves have( by bringing a wave of NFOs) for which we are penalised. Banks even after misselling have not been punished and in fact they are lauded because they brought in so much money so misselling is fine. We are ethical and that is why we take a lot of time to acquire clients we follow a process and plan and accordingly recommend them to invest still we are treated as mediators by regulator and they want us removed...why?
GOWRISHANKAR · 1 month ago
Dear Prashant,
You hit the bulls eye with your comment on misselling by these so called organised institutions well supported by the Government like banks. As everyone knows, there is very little money in the business of banking and it is very very difficult to even break even after 10 years of existence by new banks. Most of the profits are used to make provisions and the only way to make profits is by misselling (also known as Cross Selling) by banks. The government has to support those organisations in order to use them as vote banks. However, no one knows how difficult it is for a small aam aadmi distributor to acquire a new client, service him and make him grow. At the end of the game, if possible and if the resources permit, he also grows but at snail,s place. On the other hand the regulators be it the RBI, the SEBI or IRDA do little if not nothing to admonish these institutions. We the Distributor community are like the country of Isreal - we are being bombarded from all the sides by the Regulators, AMFI, AMCs and the SEBI who thinks they are the only organisation/regulator who are doing good for the society. Let them come out of their comfort zones and work without any job security to know the problems of the Distributor commuity at the ground level. They are still living in Ivory Towers and behaving like our erstwhile Babus of the British Raj.
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