When it comes to investing their hard earned money, investors are always skeptical. They fear taking the wrong decision for their investment, which might result in loss of value. To overcome this fear, they will either try do some research on their own, seek tips from friends or rather follow a friend like Eklavya, investing on the basis of ideas overheard. Even if the investor asks a friend about investment, very few people actually share with friends whether they have invested or not. Reasons are twofold, One, you don't want to be laughed at for making bad choices in your circle of friends and family, Two, financial matters are closely guarded, you don't want to divulge your investment details to anyone.
In comes the Financial Advisor. Every investor is looking out for someone dependable, knowledgeable to guide them through these financial troubles. But there is a problem. How do I trust the person with my money? Is he having sufficient expertise to manage my funds? Will he give me the right advice? Will he be available in my hour of need?
As an advisor, it is critical that we understand and address all these concerns of the investors. Some investors might come forward and state these concerns clearly, however many will hesitate. It is our responsibility as an advisor to comprehend the unsaid, and give comfort to the investors through our conduct, understanding their expectations and communicating what we are going to deliver in a clear and direct manner.
Trust is the most important ingredient of an investor advisor relationship. It is going to be built only over a period of time. You can't say “Trust Me” to an investor to induce trust in you. So how to develop a strong dependable relationship with a new client.
1. Right Introduction
Sample this, If you meet a new client and introduce yourself as, “Hello, I am XYZ, Currently managing assets worth Rs. 50 Cr from more than 400 families since last 10 years. Me/my team has helped our clients in settling insurance claims worth Rs. 50 Lac in the last 3 years. We operate completely online and try to provide best possible solutions related to investments and insurance based on specific needs of the client. Please feel free to ask me any questions you might have in your mind”
Even if you are new in the industry and do not have big figures to vouch for you, you can share your association with NJ, your certifications, your own investing experience, your differentiating points, the online platform, and most importantly your intentions of creating wealth for people.
You have given a fair idea of your experience in this short introduction. Also, you have given an opening to the client to freely ask whatever questions he may have. To have a more professional look, you can either share your printed profile containing the above information or have a video profile. Though, a small step, but gives a clear indication to the investor that he is dealing with a professional.
2. Do your homework
Know your Customer, and not just from the mandatory documentation point of view, find out which field the prospective client belongs to and try to give examples or references of clients handled by you having a similar profile. Example, with a doctor client, you can talk about some doctors known to you or may be your clients. For an IT industry person, talk about your IT clients, if any. For a retired person, you can add, total number of retired clients handled by you. This helps in breaking the ice. One word of caution, do not divulge investment/portfolio details of any of your existing clients. Not only does this constitute as breach of privacy for your existing clients, but also gives impression to prospective investor that his investment details might not be safe with you.
3. Ask Right questions
Once investor is comfortable with you, be ready with your questions. Remember first couple of meetings are about understanding the investor better. Don't be in a hurry to sell your products. Ask about his goals, investment pattern, Direct Equity/MF investment experience (if any), insurance coverage, pending loans, working members/dependants in the family, his expectations from his investment, Job/business, monthly expenses, etc etc. You should preferably have a ready questionnaire with you for collecting all these details. You need to be clear in communication that you will be in a position to give right advice only when you have right and complete details. The detailing in your work also gives right impression to the investor.
4. Keep Expectations in Check
Be clear what you are going to deliver and what you aren't. Always under promise and over deliver. Apply this to return and servicing expectation of clients. Talk about volatility in returns from market in short term and how it can affect performance. Share how frequently you will meet and review the portfolio. The client needs to update you in case of change of job, salary, inheritance, etc. Also, client needs to rebalance his portfolio periodically, if invested in MARS. Clients should not expect advice/meeting every few months.
5. Use Client Networking
Best way to gain the trust of clients is to utilise client networking. A doctor client will be happier if you sent some patients to him. A client looking to refurbish his house can be connected with a client having paints/hardware/interior design business. One connection gives you two happy clients. The more you are in touch with your clients, higher will be the chances of discovering such needs. Keep your eyes and ears open during client interactions to discover such opportunities.
6. Trust takes years to build but can be lost in a second
It takes multiple meetings over the course of years to build a strong relationship with the client. You need to have your patience and take it step by step. Your conduct has to be in the best interest of the client at all times. One mistake and a relationship of years can be ruined. Keep your communication clear and client expectations in control. Your greed for an extra percent of income some times can cost you the client for lifetime.
7. Annual Meeting
Have an annual meeting with all your clients. Think of it as your AGM. You can discuss how your business has grown, how your team size has grown, new products and services on offer. Above all you can utilise the event to say Thank you to all your clients. Everyone likes to be associated with an advisor who is growing and prospering.
8. Hand-holding during difficult times
You are in a business which revolves around the thing which is most dear to your clients, Money. Their expectation from you is managing their money in a way that it's always moving up. However, there are times, beyond your control, where the wealth creation journey takes a U-turn and gets back on track, only after a while, with a lot of difficult trenches in between. This is a very critical time, because no one wants to see his/her wealth depleting. One of the most important roles of your advisory relationship is to face the client during the downturn, support him emotionally and guide him towards the right path.
Trust is something which can not be shown or communicated. It can only be demonstrated through conduct. A partner needs to be a friend of the investor for having deeper connections. Trust is also fickle in nature and doesn't remain constant. Market fluctuations, a non performing fund, non courteous support staff, many factors can affect your trust with the client. Sound knowledge, high service standard, regular portfolio review and above all advice in best interest of the client are some important ingredients to build trust. High trust will automatically yield better references. It also releases lot of stress of the client as he knows there is someone to guide him in the right manner.
Written by: Mr. Husaini Kanchwala, Head of Investments, NJ Group.
For any suggestion & feedback, write to him at
