“When the world turns your back on you, you turn your back on the world”, is the advice Timon, the Meercat, gives Simba in the famous cartoon feature film – The Lion King. Timon gives this piece of advice when Simba is down on his chips and feels dejected and overwhelmed at being ejected from his land.
Many in the financial services space these days, feel like Simba. There has been a pincer attack - due to the regulations, the compliance requirements and paperwork have gone up manifold and at the same time, revenues have come down. No wonder there are legions of despondent folks around. There is lot of soul-searching on whether we are in the right industry at all.
But look at the other side. Regulation is happening across the globe. We can keep debating whether what happens in advanced world should be replicated in a less developed country like ours. Apparently SEBI thinks so!Now what? Are we going to wallow in self-pity or are we going to do something?
We now complete five very testing years, after the global meltdown. Those of us who are standing are survivors and three cheers to that. Most of us have understood how to do business in such turbulent times, have understood how to take the client along, how to charge them and how to keep a long-term relationship going.
Direct mode in mutual fund schemes and the Investment advisor regulations are the latest to unsettle the community. Direct mode can have an impact on those who have corporate or HNI clients. For the rest of us, it should not be an issue, though it is certainly an irritant. Investment Advisor regulation has lot of implications on financial advisors as you need to decide whether you are a distributor or a fee-only advisor. This is being done with good intentions but hardly takes into account the ground realities. The regulation on “Prohibition on fraud & unfair trade practices” is going to increase the compliance requirements manifold, as one has to do a risk profiling now, put in writing what is recommended and its suitability to the client and maintain a record to prove that he has shared all information regarding the investments with clients. This will mean that one will have to prepare a small report for every client, which does not seem feasible, unless they are big investors.
So, what do we do? Is it gloom all the way?
Not really. India as a country has grown in spite of the government in the last 65 years, not due to it. It is the ingenuity, industriousness & hard work of its citizens that has ensured that it is one of the front- runners today. So, we are used to harsh conditions, aren’t we?
Let’s start counting our blessings now. We have about 2000 financial planners & 15,000 active MF advisors and about 150 million addressable population, which can avail of various financial services and advice. Think about it, the addressable population is 150 million! So, in spite of all the challenges, the opportunities are overwhelming. Did I hear somebody say the financial awareness is low? Yes, it is. It is up to us to increase it – for our own benefit. Why not do awareness seminars for the public? There is a two basis point allocation by AMCs towards investor awareness. Can we not access this fund to increase awareness among the public? This is available on a platter for all of us to use; so why not use it?
Secondly, do we have a service mentality and do we really want to help others? Check this first because without this, nothing works. With it, no one can stop you. Clients want to deal with people who really care for them, empathize with them. Such clients will be willing to pay the price you quote, because you have won them over.
Thirdly, the regulations are, in a sense, working in our favour. Regulations have made it difficult for investors to do things on their own. They now need advisors to do it for them! Also, since the regulations have made life difficult for distributors and advisors, many have moved out. The entire business is now available to those still standing.
Tough times never last, tough people do. Incidentally, going back to The Lion King, Simba came back to claim his rightful place as the King. Like Simba, we should have the courage of conviction to look at adversity in the eye and grab the opportunity that lies behind. In our case the opportunity is not even hiding. It is in front of us. Let’s go for it.
