Census 2011 shows that there are nearly 10.4 crore elderly persons (aged 60 years or above) in India. Of this 5.3 crore are women and 5.1 crore male. Further, a report released by the United Nations Population Fund and HelpAge India suggests that the number of elderly is set to grow to 17.3 crores by 2026.
If you are a financial advisor looking to serve this population, these are exciting numbers. However, this opportunity comes with multiple challenges. Let us weigh in on those challenges and figure out solutions to them.
Your Age: Your age can be a deciding factor to serve this category. Let us assume your age is 50 and you want to manage a 60-year-old’s money for the next 25-30 years. Now, by the client turns 90 year, you will be 80-year-old as well.
As most of you run your own show individually, will you be able to serve them beyond a point?
Time devotion: Many of the retired individuals having decent corpus stay away from their kids. Hence, loneliness is among their biggest problems. In such a scenario, they may want your time more than the returns from the investments.
I know a few retirees who are in their 70s and 80s. They keep FDs with banks not just for returns but also see it as an opportunity to talk to people.
If you serve them, they may call you often seeking clarification on something or the other. At this age, it is natural to have a weak memory and they may keep asking you the same thing multiple times. Moreover, you have to overcome the generation gap challenge as well.
Commercial viability: Assuming that you have all the patience in the world and can deal with 50 such retirees, is it commercially viable to manage the relationship making them a primary source of income?
Let us do the math.
An average book size of 50 lakhs with 100 people takes the AUM to Rs 50 crore. The probability of this AUM growing to 100 crore is nearly impossible. In fact, it may deplete further as they may need regular income from the investments for periodic needs like medical expenses, grandson and granddaughter’s wedding etc.
Even if we assume gross 50 bps revenue from this AUM, it would be Rs 25 lakhs or even less. If the AMCs are forced to reduce expenses, it will only go down.
Undoubtedly, the market size in terms of number of retired people is huge and likely to get only bigger. However, you may need different skill sets to handle these people. If you are looking to reach out to this segment, here is how need to be prepared:
Solution:
- To begin with, create a group of 8-10 such retirees and let them spend time together
- Have a monthly meeting with them and ask them to share ideas, stories and books with each other
- If you are able to acquire 50 such clients, you may run 5-6 such groups
- Since having more than 10 people in a group can be chaotic, you should avoid such a situation
- Moreover, you can run an annual tournament of Bridge, Sudoku and Carom and keep them engaged
- More importantly, all this can be done without getting involved personally by putting an enthusiast resource
By doing this, you will have happy clients and many experiences to gain at personal front as well. Remember, financial advisor’s job does not end with managing money. It also includes managing emotions and creating happy experiences.
Vinayak Sapre is a leading financial trainer and mentor.
The views expressed in this article are those of the author and do not reflect the views of Cafemutual
