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Nivesh Jaagran Understanding SME clients

Understanding SME clients

Here are three common traits of SMEs that will help you deal better with them.
Daya Ragunathan Dec 13, 2017

A recent government statistics shows that there are nearly 50 million Small and Medium Enterprises (SMEs) in India, which contribute 45% to the Indian GDP.

They are currently a woefully underserved segment and present a great opportunity to those IFAs who can understand their needs, aspirations and behaviour before approaching them.

Here are the three common traits of SMEs that will help you deal better with them.

Averse to investment risk

Often SMEs face a lot of risk in their business. When it comes to their investments, they prefer investing in less risky assets. Mumbai-based IFA Ritesh Sheth of Tejas Consultancy who caters to SMEs says that such clients prefer investing in FDs and postal savings.

Ritesh believes that such clients invest in mutual funds once they gain confidence in it. “I encourage SMEs to invest the interest portion from FDs in mutual funds. I tell them that by investing just their interest portion, they are protecting their capital,” he says.

Need more working capital

SMEs are working capital intensive. Often, SMEs do not want to see their money locked in for long time. They need money to meet their day-to-day business requirements.

Rajkot based Ram Barcha of Vikalp Finvest feels that liquid funds are best suited to park their money, “I suggest my clients to park their funds in liquid funds over the weekend to help them earn returns. Since money is not going to be used for any transaction during the week end, it might as well earn them some additional interest.”

“Overtime, after seeing good returns from liquid funds compared to current account and savings account, they are willing to explore other mutual fund schemes. In other words, advisors can start with liquid funds to cross sell other MF schemes,” Barcha says.

Pressed for time

Fix an appointment in advance. In addition, you must carry all relevant documents such as application forms and KYC forms.

“When I sit with SMEs, I try to get all the work done on the spot. This way I and my clients do not have to make trips to each other’s place,” says Ritesh.

Ram, on the other hand, gets all the work done online. “I arrange for the AMC personnel to help my clients with the process. My clients find this much more convenient,” he says.


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