I had the privilege of doing a client review for an IFA. He/she ┬áis a senior IFA with about 500+ clients – and the aum does not matter does it?

I WAS PERSONALLY shocked to see that such a senior IFA’s clients did things WITHOUT asking/ consulting him. Is it compulsory for an IFA to be consulted for withdrawing? No. of course not…..but what I saw convinced me that:

  • If clients have not redeemed money it means they have not had need for any big amount
  • The easiest money to be redeemed is the MF money, so when people need money they redeem
  • some people had removed money from pension funds – PAYING A PENALTY for doing so. Amazingly dumb.
  • most people had 2-3 funds and they removed money from funds with IMMEDIATE past being poor performance
  • Franklin India bluechip and Hdfc top 200 had suffered more than Franklin Prima (not a detailed analysis, so, relax)
  • some people had just withdrawn at random – whatever was available…then again after 2/3 months of SIP investing…
  • the IFA knew about some of the redemptions when he got the statement from the RnT agent
  • people with ‘good intentions’ give advice and have no clue what happened next. Amusing.
  • It is easy to give unbiased, good advice and then hope that they listen to it….but may not be true
  • Free advise giving good samaritans have no clue whether their advise got used

Suggestions for investors:

  • decide whether you need an adviser or do not need one
  • once you decide that you need an adviser ask around, shop around, and choose one
  • do due diligence before deciding on the adviser
  • decide what do you really need – an adviser or a clerk for filling forms
  • negotiate fees accordingly. Do not blame the form filler for bad advice nor the intellectual adviser for poor form filling
  • you have a choice of fee based agents / commission based – each has merits and attractive at various price points
  • decide whether you want free, irresponsible advice or paid responsible advice – both are available
  • when you learn from a forum or a blog remember it is generic advice not specific

Suggestions for IFA:

  • decide how many customers you can really service
  • create SLA – service level agreements FIRST IN YOUR HEAD, then write it down
  • ask clients what they really want
  • decide whether you want to do that
  • some clients can be very demanding and demand things that YOU do not like to give – like a monthly meeting
  • some clients may not match your wave length in thoughts
  • some clients may call you regularly saying ‘another agent is willing to do this’
  • adding clients is fine, removing clients is a MUST
  • the 80:20 rule will apply. Learn to protect 80% revenue, not client numbers
  • if you have been in the business for say 20 years..there maybe some ‘clients’ whom you have forgotten. Seen this happen.



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