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Could you summarize the year 2023 in the form of business lessons? What are the three business lessons that every MFD/RIA must know?
One crucial lesson for me is Know Your Customer (KYC) is the most pivotal aspect of advisory/distribution business. Each client is unique and he behaves differently depending on the circumstance. Hence, you need to spend more time with your clients to understand their unique needs and aspirations.
Another key observation is that the calendar year 2023 was much better than 2022. However, not all clients are satisfied -they keep looking at others’ return generating products and some fund houses have schemes which returned 54% too! Remember to tell the client that only those who were there from the beginning to the end got this 54% - not everyone who entered late or left early!
Three key considerations persist:
a) Understanding the client's expectations
b) Identifying the goal for which they are saving
c) Emphasizing that achieving goals is the primary objective of investing – factors such as alpha, beta, beating the index, etc. are secondary and relatively insignificant.
What are the key trends that MFDs/RIAs should watch out for in 2024?
Markets are always volatile and in an election year, it will be even more volatile. Being prepared is important. If the client has too much of an equity exposure, shifting some money to balanced advantage funds will make sense - let the fund manager handle the volatility with professional tools and psychological help.
What are the three must-have business skills for MFDs/RIAs in the coming year? And why?
a. Demonstrating emotional maturity to navigate clients' dynamic moods, especially in the wake of elections
b. Selecting right fund houses - no single MFD can do sensible business with 50 fund houses - choose sensibly, don't get carried away
c. Talking to the client's family - so that they are all on the same page when it comes to the portfolio
What are the top two business opportunities (for example, retirement planning, millennials, etc) that MFDs/RIAs should tap in the new year? And how can they do that?
I have been saying this for years:
a) MFD/RIA should plan their own retirement - once they do this, they will understand the importance of succession planning
b) MFD/RIA should start writing his own will and the will of parents, kids, friends, neighbours etc. and using this as a tool for increasing business - relationships, size of relationships and quality of relationship
