I had the privilege of doing a client review for an IFA. He/she  is 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• some people had just withdrawn at random – whatever was available…then again after 2/3 months of SIP investing…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.