I recently addressed some IFAs for a Mutual fund house. There were many of them present there – and I met a nice senior person who had spent 3 decades had 3 offices to offer financial services. He was doing very well and continues to do well. In some cases he is now servicing the 3rd generations’ financial requirements.
He says he ‘charges’ clients fees because he gets clients ‘charged’ to take ‘charge’ of their financial lives! Nice one. Here is a summary of his his attitude towards charging fees:
I am quoting him….well almost!
Many people ask me questions which I do answer. Frankly I do not know how should I charge them for the same. Many people who ask me some of these questions greatly benefit from the answers. However charging them a %age of the money they saved / earned seems to be difficult.
Some answers have to be thought out, whereas some answers can be given over phone in 30-45 seconds. So charging them for the time spent can be either very low or irritate the end user no end.
Many of the people who ask questions are people with whom I do have an existing relationship – financial, or non financial. I really cannot charge friends, relatives, or colleagues. So to say ‘Charge only outsiders’ seems difficult to implement, and not remunerative to think of ‘advising’ as a business.
What questions do people ask? I probed. He listed them:
My parents are 60 years old can they get medical insurance? From which insurance company should I take it? (I do not deal with general insurance, and hence actually do not know)
A neighbour is offering a car lease finance scheme. I have to pay Rs. 10 lakhs – and I will get Rs. 18,000 per month for the next 20 years + I will get back my principal. Should I invest? (Mathematically it is not possible to run such a scheme for too long/!)
Should I invest in Gold? Will it give 24% p.a. return for the next 10 years?
My current CTC is Rs. 37 lakhs. A new company is offering Rs. 32 lakhs + Esop worth Rs. 15 lakhs – which I can sell after 3 years for 30 lakhs. Should I take the offer? (3 years later!! Will the company exist?)
I have a home loan with a floating rate (currently 13% p.a.), a car loan (at 15% p.a. flat) a personal loan (at 21%), a credit card loan (which I hope to pay off in 3 months time). My banker has also invested my money in an Income fund (we exited the markets at 12000 – so lucky it then went down to 9000!). Is my RM doing a good job of my portfolio?
so on and so forth….frankly in many of these questions I need 30 seconds to reply. What do I charge? Any suggestions?
After all if I am a doctor I need to be paid on time spent – not for transactions like a chemist!
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