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Dhananjay Banthia, keynote speaker, mentor & author and Debasish Mohanty, Chief Strategy Officer, The Wealth Company shared their insights on the power of storytelling and how MFDs can use it to simplify complex concepts in an interactive webinar with Cafemutual. The session was hosted by Nishant Patnaik, Associate Editor, Cafemutual. Here are the main highlights of the session:
Significance of story-telling for MFDs
Debasish explains that as Indians, we grow up with stories. All our ancient epics like Ramayana, Mahabharata are stories.
Debasish defines SMART as Simple, Meaningful, Authentic, Relatable and Topical. He explains that smart stories can help distributors make the unfamiliar familiar, the intangible tangible and your pitch from unbelievable to believable. He shares example of how he uses the story of Arjun focusing on the bird’s eye to motivate SIP investors to only focus on their financial goals and not anything else.
To advise clients not to get distracted or influenced by rumors and speculations, he uses the story of the golden deer from Ramayana. To explain how small contributions can led to great results, he uses the story of how squirrels contributed to make the Ram Setu bridge in Ramayana. These stories can help MFDs in client retention, acquisition, upselling and cross-selling, he believes.
Dhananjay believes that investment is both science and art. While the science is taken care of by the fund manager, the art of investment belongs to the distributor. He explains that while data and conceptual knowledge make the foundation for any distributor, it is important to present these in a beautiful manner, which can be done with storytelling.
He observes that as most of the conversations between MFDs and clients are non-financial, it gives distributors enough opportunity to use examples and anecdotes to share their expertise. He asks MFDs to use data mixed with stories which can make complex concepts emotionally engaging.
How to use story-telling for client acquisition?
Dhananjay explains that the foundation of story-telling is listening to stories. He suggests MFDs to always carry a diary and pen to note down any interesting stories they hear and make a collection of it. Such a reserve of stories can be used spontaneously during a long conversation with the clients.
He also adds that it is important to link these stories to not just finance but also to life. He therefore asks distributors to see themselves as solution providers and not salesmen.
Things to keep in mind while crafting stories
Debasish asks MFDs to see themselves as not selling a product but a process that can potentially give returns. He shares the story of how a Kolkata sweet store increased its sales by putting its kitchen before its sales counter, which led to increase in trust among customers about their products.
How to respond to impulsive decisions of clients during bullish and bearish market?
Dhananjay asks MFDs to encourage their clients to check their investments in comparison to their goal amount and not their invested amount. He gives example of how during a long journey, people don’t take out their luggage at every station. Similarly, investors should also not take out their investments at every stage of their investment journey and only think about redeeming money when they reach their goal amount.
What should MFDs do when long-term returns become negative?
Dhananjay shares his experience in long-term investments and asks MFDs to rebalance their clients’ portfolios regularly. He also says that it is important for MFDs to communicate this need for rebalancing while nearing the end of their investment duration. He explains this using an example that just like the speed of a vehicle needs adjustment when it moves from a highway to a crowded city, MFDs need to redirect investments to safer products when an investor reaches near his goals.
Both experts also answered some common questions asked by clients to MFDs in a role play session conducted by Nishant. Here are a few.
What return can I realistically expect in 5-7 years?
Debasish said that the GDP and inflation combined grow at about 11% every year. In addition to this, fund managers may generate alpha of 2-3% based on market conditions. However, these returns are expected and not guaranteed.
What risks are there in mutual funds and what happens to my investment if something happens to you?
Dhananjay explains that it is important to understand that risk is not related to loss but uncertainty. We all take small risks every day like crossing the road, driving car on a highway etc. to earn money. Similarly, our money also needs to take some risk to grow. Risk mixed with intelligence leads to wealth creation. Just like people trust the authorities and the process while taking a flight, investors need to trust the mutual fund managers and the investment system to generate returns.
I have invested in life insurance policies. Why should I start mutual funds?
Dhananjay believes many MFDs tend to get into arguments with clients over knowledge. They often try to correct clients before connecting with them. For example, when a new client says they have invested in life insurance policies for the future, many MFDs immediately respond by saying the client made a wrong decision because such investments may not beat inflation.
Instead of starting with a negative connotation, it's better to acknowledge the client’s effort by saying:
“You’ve done the right thing by investing—many people don’t even take that first step.”
It's important for MFDs to connect with clients before correcting them—and storytelling can be a powerful tool to do that.
How to explain to investors whose portfolios are showing a notional loss?
Debasish explains that client losses will become real only if they redeem their investments., Just like how people who have bought a new car will face a loss if they sell it right away, checking portfolio every day in expectation of return is like uprooting a newly planted seed to check its growth.
What is better: SIP or lump sum?
Dhananjay says that if the client has a regular stream of income and financial obligations, SIP is the only option. However, if there is an irregular supply of funds then lumpsum can work. However, lumpsum requires adequate asset allocation and additional strategy looking at the prevailing market conditions.
Why should I select regular plan instead of direct plan?
Dhananjay says that a distributor should maintain neutrality and tell the client that if he has adequate knowledge, understands complex financial concepts and has time for research, he should opt for direct mode. MFDs should then list benefits of distributors like emotional support, query resolution etc.
You can watch the complete session by clicking here.
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