The last one year has been a roller coaster ride for advisors with more dips than highs. At the sixth edition of Cafemutual IFA (CIFA) event, Prem Khatri, Founder & CEO, Cafemutual advised IFAs to ignore the noise and hang on because ‘picture abhi baki hai’.
Sharing the rationale with the audience behind his belief, he took them down the memory lane describing the changes in the mutual fund industry in the last 25 years and how despite commissions falling by 80%, incomes of distributors who stayed in the business have multiplied manifold.
Prem began the presentation with a surprising revelation - in the last 25 years of mutual fund industry; there have been only nine ‘good’ years, i.e. years when there was appetite for equity funds driven by bullish markets. In spite of the lacklustre demand for equity funds in 16 out of 25 years and a reduction in commissions from 5%-7% (in pre-2009 era) to around 1%, we have seen growth and profits for those IFAs who have persevered and stayed the course.
Referring to the increasing affluence, he also said that while wealth was growing, there was paucity of good advice. In fact, AMFI had a separate committee, which focused on getting more IFAs to join the business. This pointed towards a low supply and high demand scenario rife with opportunities. However, advisors would need to tweak their model to benefit from them.
Prem concluded the session with three actionable ideas for advisors:
Move from unidirectional model to holistic model:
Instead of focussing on equity funds, IFAs should increase their product bouquet to offer a complete financial solution for clients.
Be relationship oriented instead of transaction oriented:
Typically, IFAs focus more on client acquisition than retention. However, having a strong hold on clients can help IFAs get more business from a client as well as make the client his advocate.
Forget product ownership and focus on client ownership:
Build a deeper connection with clients through regular engagements. This will offer IFAs opportunities to grab a bigger wallet share of their client's investments.
He closed the session by urging IFAs to ignore the noise and take charge as there are more fortunes to be made for both advisors and clients.
