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2022 which was an eventful year for the MF industry also taught timeless lessons that are instrumental in creating the vision board for 2023. We spoke to top MFDs/RIAs to understand what 2022 has taught them. Let’s look at these lessons:
The MF industry crossed the Rs. 40 lakh crore mark for the first time in 2022 but market volatility worried many.
However, it wasn’t that much of a worry for Delhi MFD Ashish Chadha of Chadha Investment Consultant who practices asset allocation. He said, “We emphasized incorporating fixed income products to shield against volatility. We recommend healthy exposure to fixed income funds depending on the risk appetite of clients. Hence, market volatility doesn’t impact us much.”
Key lesson here is just like clients need asset allocation to ride the volatility, MFDs should practice asset allocation to protect their income from market volatility.
But volatility often makes investors anxious and make decisions which may not be so good for them. What Goa MFD Jennifer Mendes did was, she served constant reminders about wealth creation through patience and discipline. “Driving a belief and conviction in investors to create big portfolios through consistent and disciplined investing through SIPs and lump sum through STPs is important”, she said.
Keep reminding clients about patience and discipline - is the second lesson.
However, at times, we face difficult clients who put their foot down and insist on untimely redemptions.
Goa MFD Hari Kamat dealt with them tactfully and introduced the concept of ‘repentance money’. He explained, “I show them my MF statements to explain wealth generation despite fluctuating returns. Even then if an investor is adamant I let him/her redeem and insist on keeping a small balance invested. I term this as repentance money and could even be a few thousand. As they see this modest money grow, they feel remorse at their decision of making early redemptions.”
Introducing the concept of ‘repentance money’ can keep a check on unnecessary redemptions is the third lesson learnt.
Apart from volatility, information overload can result in Illogical decisions. Besides, advertisements and social media influence investors.
Mumbai RIA Vivek Rege of VR Wealth Advisors tackles this by asking the right questions. He said, “We ask relevant questions that make investors think over their decisions. It makes them understand that financial decisions are not to be based on any advertisements but need to be meticulously thought through.”
This gives us the fourth lesson - Asking relevant questions leaves some food for thought for clients.
Lastly, as social media has become an integral part of many lives, Bangalore MFD Dilshad Billimoria figured it out to be the most suitable medium for spreading financial literacy.
She said, “Digital marketing reaches large audiences and enables one-to-many financial literacy programs. Leveraging on social media platforms, we conducted multiple programs on different topics like personal finance, taxation, estate planning and ETFs amongst others.”
Thus, leveraging social media to impart financial literacy is the fifth most important business lesson that the year 2022 reinforced.
