Paul Resnik, Co-Founder of FinaMetrica says that advisers need to understand the risk profile of their clients before engaging them.
Is risk profiling the first step in engaging a client?
It’s the easiest way of engaging a client without intimidating them. Most of our subscribers conduct a risk tolerance test of their prospective clients even before they meet them. By the time the advisers actually meet their clients, the advisers already know a lot about them. Our software helps advisers easily move to being client centric from product centric.
Does improper understanding of client’s risk tolerance lead to mis-selling?
People who assess risk tolerance properly are less likely to mis-sell. Doing it incorrectly will increase the likelihood of mis-selling. It doesn’t mean it definitely will because it’s just one input to the planning process. If risk tolerance is done improperly, it doesn’t mean you are a bad adviser. It means that you have to work much harder to overcome the flaws in your system. So you can’t make a judgment on the competency of an adviser based on his/her risk profiling methodology.
In how many countries is your software available?
We are present in 21 countries. I’m responsible for most of these.. My partner looks after America, Canada and South Africa. We have more than 5500 clients globally. We are actively concentrating on US, UK and India this year.
How many subscribers do you have in India?
We have around 20 clients in India so far who discovered us through online search and word of mouth, some of them have been using FinaMetrica’s risk profiling tool for more than 7 years now. We have received good feedback from our Indian advisers..
Why haven’t many advisers in India subscribed to your package?
I have one client in Australia who subscribed after negotiating with me for 13 years. Subscription is voluntary. I don’t set any high expectations in any country I go to. Nevertheless I’m reasonably optimistic that by the end of the year we would have a few hundred local subscribers. Our usual growth pattern starts with leading edge advisors adopting it first and then the word of mouth brings us further subscribers slowly and steadily.
What made you launch this software in India?
This is my third trip to India and I have observed a few characteristics. Advisers in India have an enthusiasm to do things better. The advisers and fund managers here are very smart. The opportunity is terrific. India has a growing middle class. With no social security, the middle class needs to look after its future. It needs to be better educated. Currently there is a strong bias for assets like real estate and gold. There is a natural nervousness towards things they don’t understand. India needs its people to invest in equity markets with confidence. An economy only flourishes if there is a growing investment in the local capital markets.
What is the cost for this package?
We charge $ 1000 (AUD) in Australia. In India we charge as $ 250 per adviser which comes to around Rs 14 000 annually. So the price I charge in India is 25% of what I charge in other markets. A number of people have told me that I can’t charge too much in India. I listened.
This is the second and concluding part of the interview.
