Ashutosh Bishnoi, MD & CEO Mahindra MF took the bull by its horns when he promised advisors that ‘Commissions will fall further but your earnings will rise.’ He backed up his promise with actionable ideas for advisors to grow their business.
Before sharing the solutions, he outlined three key challenges: 1) Business practices, which worked before are no longer effective. 2) There is a potential conflict of interest in trail model; advisors may not churn even if the scheme does not perform. 3) Servicing retail clients is becoming cost prohibitive for smaller advisors.
Bishnoi believes that growing business in such a scenario requires a recalibration of business strategy. He gave three actionable tips that can help you grow business in an all trail era.
Be their money doctor
Sharing findings from an independent report, Bishnoi revealed that the number of households earning Rs. 2 lakh and above monthly would grow to 1.6 crore and households having monthly income between Rs. 1 lakh and Rs.2 lakh would grow to 5 crore by 2025. “A growing number of these individuals would need financial advice to manage their money. However, these individuals will not just invest in mutual funds. Their portfolio will have a mix of gold, insurance, bank FDs, loans and mutual funds. If you want to be their money doctor you need knowledge of other financial products too,” he said.
Bishnoi encouraged advisors to expand their offerings and said that instead of selling just mutual funds, advisors should offer clients a holistic financial solution based on their needs. “While you may not distribute gold, you should advise your clients if it is the right time to buy, sell or hold gold as it forms a major part of client’s portfolio,” he said.
Bishnoi recommended advisors to look at customer specialization to grow business. “As different categories of customers have distinct needs, advisors should decide to service a particular client segment such as retirees v/s non-retirees, men v/s women, rural v/s urban, earning v/s non-earners,” he said.
Bishnoi said that advisors could identify their niche by looking at their existing client base. It is possible that most of your clients are salaried individuals or small business owners. Whatever it is, a focused approach would give you more clients and help you become more referable.
Institutionalize your business
Bishnoi asked advisors to give their business a distinct brand to make it more relevant to customers.
He asked advisors to institutionalize their business by joining a known network, starting their own network, creating a group of IFAs or consolidating their business. He particularly mentioned business consolidation that is starting a private limited company along with a few fellow advisors as a good alternative for business succession.
He closed the presentation by reminding advisors that re-inventing their business is the need of the hour.