Principal Business Champions – Winning Ideas, a joint initiative between Cafemutual and Principal MF provides advisors a platform to share their experiences and business insights with the advisory community.
In the latest edition of the contest, we asked advisors how they manage their client’s emotions when markets take a turn for the worse. The contest received overwhelming response from the IFA community.
Here are the entries that received the highest votes.
Winner on Website: Haldwani (Uttarakhand) IFA, Rashmi Johri
I stay in touch with clients in difficult times through WhatsApp.
2018 was a tough year for markets. Most of my clients who started investing in mutual funds in 2017 saw subdued returns. To deal with this, I started sending them educational messages on WhatsApp. I shared messages on three main themes:
- Don’t panic - markets tend to be less volatile over long term
- India has potential to deliver healthy long term growth
- Every bull market has corrections, volatility is part and parcel of equity markets
Another activity I do to boost their confidence is sharing long-term performance of equity funds across cycles.
Winner on Twitter: Gorakhpur (Uttar Pradesh) IFA, Ashish Kumar Agarwal
I insist on my clients to give me a written commitment that they will remain invested until they achieve their financial goals.
I believe in setting the right expectations from the beginning. Hence, I tell my clients about the risks associated with mutual fund investments while onboarding them. Also, I ensure that my clients invest in equity funds for their long-term goals like retirement and children education. Also, I insist that they give me a written commitment that they will remain invested till they achieve their financial goals. However, seeing negative returns, many clients panic and approach me to redeem their investments. To deal with this behavioural bias, I remind them of their commitment.
Winner on Facebook: Beed (Maharashtra) IFA Kiran Bharde, Anushka Investments
I increase my client communication in difficult times.
During market correction, I conduct multiple sessions for my clients to address their concerns. Though I tell my clients that equity investment is a long-term game, many of them panic after seeing negative returns. Hence, I meet them to reinforce the message that volatility is temporary but investments are for long term.
Further, I regularly share articles with them to help them understand equity markets.
