Client interaction and client education is a year long – life long activity. However, when the markets are good, we tend to think that the client will do all the learning himself or herself. Let us see what mistakes we are likely to make and what we should avoid.

Possible mistakes:

  • telling the client ‘I got you 27% return in 2017’
  • you have reached the absolute amount target for 2022 already, so let the money remain in equity
  • let us increase the target amount for 2027 based on the current CAGR
  • even if it is a little lower, 2018 also looks promising, so you can expect 20% if not 27% return
  • taking sectoral calls – pharma and IT are the sexy ones I hear?
  • encourage client committing more to equity SEEING THE 2017 numbers

Actually what should you be doing:

  • explain that 2017 was an aberration
  • explain that 2018 and 2019 reported CAGR will be even higher – remember 2008 will be dropped soon!
  • explain 3 year and 5 year rolling average and not just CAGR
  • use the excess return of 2017 to invest in debt funds esp for targets which are in 2020-2023
  • explain that the returns were got by the market, not by you or by the client. Luck, not skill
  • admit that you do not know what 2018 will do
  • do not assume that Estate duty and Cap gains tax will NEVER come back
  • do not take sectoral calls – stick to asset allocation as per client’s needs, NOT as per market performance

cannot think of more….in case you can please put it in the comments below?


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