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Identifying client needs and requirements is the first step to build an investment portfolio. But, what should MFDs/RIAs keep in mind to decode and assess client aspirations better?
The first episode of the new season of ‘Lessons from Masters’ addressed this pertinent question. ‘Lessons from Masters’ is a webinar series powered by Aditya Birla Sun Life Mutual Fund where top MFDs/trainers share nuances of various aspects of the distribution business.
It hosted, Lovaii Navlakhi, MD & CEO, International Money Matters, who in conversation with KS Rao, Head Distributor Development and Investor Education, Aditya Birla Sun Life MF deep-dived into assessing and managing client aspirations.
Here are the three key takeaways:
1. Focus on the why
Understand the why and decode the reason behind investing. Humans ultimately act on emotions, and there could be a possibility of emotional influence. Understanding and dealing with emotions becomes important here.
Also, putting yourself in clients’ shoes makes it easier to understand their situation. Once you empathise with them, you can comprehend why they have particular needs and requirements. This translates into asset allocation, which in turn should be mapped to their comfort.
2. Make your clients comfortable
Make your clients understand why as an MFD/RIA it is important to know their dreams/desires. How this information is crucial to add value to their lives and guide them better. The whole idea here is to make clients comfortable and open to talking about their current as well as future aspirations. This leads to meaningful, transparent and deeper conversation. It also helps to guide them on their life as well as beyond lifetime goals.
3. Keep in mind these simple three tips
Tip 1: Remember no two investors have similar needs
Tip 2: Keep asking questions and lend a patient ear
Tip 3: Basis your previous experiences, address questions that clients may not ask but you know are important
A fee-based business model
Lovaii also briefly touched upon what goes behind creating a fee-based model. Interestingly, he is amongst the first few advisors to start a fee-based practice in India.
Fees being cost to clients and services being value, Lovaii believes that clients are willing to pay fees if value exceeds cost. He suggests a good amount of research before quoting any fees. Talking to multiple clients and gauging their responses becomes handy here. Also, a customised fee approach could be considered. For instance, different fee structures may be designed for an individual investor and a family of investors.
Further, talking openly about your commission from mutual funds and documenting what clients need to do and what they can expect fosters transparency and eases the fee conversation with clients.
You can watch the entire episode here.
