Investing Fears That Your Clients Have

Tuesday, July 30 2019, Contributed By: NJ Publications

The reason behind investing is Fear and behind not investing is also fear. An investor invests because he fears he won't be able to meet his life goals otherwise. The investor does not invest because he is fearful of investing. Today we will talk about the latter, the bad fear, which hinders the investment process.

A crucial attribute that an advisor should work on, is understanding human psychology. The plain fact that what you are dealing with is a human being, explains the psychological significance. Humans base their decision making process largely on emotions, and you need to handle the investors' emotions with care. A major investing decision owing to emotions is “not to invest”. This decision can be based on a number of factors, and the investor's fear is a prominent factor, among others. Not investing will sabotage the investor's future, and it isn't good news for the advisor's business either. An advisor would have encountered many investors over his career who do not invest because they are too afraid of investing. And no matter how much gyaan on investing you give to them, or how good a salesman you are, things just don't work. He's adamant, “I am too scared, I don't want to invest”. So, how do we go about tackling such an investor? The solution to this dilemma is not an excellent sales pitch, but understanding the investor's psychology and helping him overcome the fear before advising him to invest.

The fears which haunt investors and keep them from investing are:

1. Fear of losing money: There are many investors who do not invest because they fear, they will lose money. And the fear of losing money is greater than the jitters one can get from watching the scariest movie ever. When the markets are high, these investors wonder what if the markets correct after they invest; if the markets are in the correction phase, then often a negative sentiment in the market don't let them invest. Such skepticism is often a result of bitter past experiences, warnings from friends and family, a timid nature of the investor, etc. So whats needed at your end is understanding the psychology, the root cause of the investor's fear and then provide a solution. You need to explain to the investor that if he does not invest, he will have to compromise on his life goals. And all investing products are not necessarily risky, so no point being scared of investing.

2. Complexity of the product: Sometimes the investor doesn't understand the product and thus stay away from it. Many investors do not invest in equities for instance, because they just do not understand its functioning. Lack of clarity has instilled suspicion and uncertainty among them, and this perception when extended over a number of years puts a highly resilient barrier to Equity's entry. So, in order to break the barrier, the advisor has to tame the investor's uncertainty by untangling the knots.

3. Wrong definition of enough money: “I do not have enough money to invest”, “I will not be able to continue investing”, “I will not win a war with such a small amount”; fear of inadequacy hinders many people from investing. What they need to understand is, there is no concept of “enough money” in investing, saving and investing is on the basis of a percentage of your income, no matter how small or big it is. The solution to such fear is “starting small”. A small SIP of Rs 500 or Rs 1,000 can be a good investing kick off for such an investor, and as income increases the SIP amount can also be increased.

4. Emergencies: Many times the thought of a cash crunch during emergencies won't let the investor invest. People keep a buffer for unexpected future needs, they feel if they invest the surplus, they won't have anything left to feed the emergencies. If the advisor is able to gauge this fear of the investor, it has a very simple solution, an insurance cover against insurable risks and an emergency fund with high liquidity to meet other contingencies. Once the investor is done with providing for emergencies, there will be room for investing.

The above are some of the most common investing fears, which can only be dealt with once you are able to relate with the investor's mindset. You have to understand his psychology, help him conquer his fears and then advise him to invest.

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The Most Difficult Questions Clients Ask

Tuesday, July 23 2019, Contributed By: NJ Publications

Over your career as a financial advisor, you must have had answered to tons of and different sorts of questions. You must have observed that people ask a lot of questions when it's about 'money', and it's such a sensitive subject that it'll bring an introvert of the highest order to talking. These questions not only come up from your clients but from friends, acquaintances and even strangers. After all, they too are your prospective clients. Your profession is such that your presence is seductive, a relative's relative would barge in out of nowhere at a wedding, and a meteor would be thrown at you directly from the Milky Way. You'd be thinking aloud, “Bhai let me at least finish my gulabjamun, before asking for setting your finances right in 5 minutes”. People expect an advisor to be a financial guru, a powerhouse of financial information, and having an instant solution to all their investment hurdles.

We are prepared for such situations and questions from our clients, there are the same conventional questions; where should I invest for my retirement planning? Why should I invest in Mutual Funds, what's wrong with my FD investment? Why a modern insurance over a traditional insurance? The answers to these questions is your expertise, you have heard and responded to them time and again, there are definite facts and figures to support your contentions which are often enough to convince the client. However, sometimes the questions carry a surprise element, or something which you don't have an answer to. These fall under the category of 'difficult questions', and the motive of writing this passage is to acquaint you with these probable 'difficult questions' that you might face.

Here are a few questions which can put you in a dilemma, so be aware and prepare yourself for any pleasant or otherwise surprises.

Q What if you or the distributor or the fund disappear? Many clients are skeptical about the sustenance of the financial advisor or the distributor, etc. They have doubts about what if the advisor or the distributor close down the business unanticipatedly or what if they die. Whose doors will they knock for their money? The answer to this question lies the strength of the MF structure, the strict regulatory framework and an unblemished history. So, acquaint yourself with the structure and regulations and be ready to shove them at the client, when needed.

Q Share Market is a Satta. My so and so lost lakhs of Rupees in the market? How will I make money? May be the so and so was naive, he/she didn't invest in Equity Mutual Funds but in direct Equity, was mislead, fell prey to market sentiment, anything could have have happened, and the loss has struck terror in your client's mind. Familiarize yourself with the background, which when sculpted and presented well, will be the answer to the question.

Q You said the fund has generated 20% return on an average historically, why did I get 12% only? That 20% was historical, and history may or may not repeat itself. But if the investment is given enough time, it is capable of surpassing history.

Q How do the markets look like? Do you see they'll continue to upsurge or will take a U-turn? Or which one is a better stock A or B? You are not God, but you can't tell that to the inquisitor blatantly. The art here is to convey the oblivion in the most diplomatic manner.

Q On what basis do you decide I should invest in this product?

A whole lot of research, hard work, experience and continuous learning goes into ascertaining the wisdom to be able to determine what's right for the investor. On the basis of the virtues mentioned and conviction in the quality of the product you offer, you'd select the best option for the investor.

Q Technicals of a new product.

It can be a blessing if you know the answer, will give strength to your case, contrarily it may also lead to raised eyebrows if you don't have the answers. So, whenever a new investment product enters into the market, brush up your knowledge with the whereabouts of the product, even thought it isn't in your basket.

So, the above were some of the tough questions, among many, that your clients may ask. When you face a complicated question, make sure you:

> Clarify the question, so that you understand what the client is trying to ask, before you jump on to a fancy and elaborate response. May be the client doesn't intend to be tough on you, it's just his choice of words that may have worked the other way round.

> Use Examples, Once you know the question isn't a routine simple one, you need to go out of the box to convince the questioner. For this you have to support the basics with examples, facts, figures, data, etc. Examples and numbers work like magic to expose the eminence of the universal truth.

> In case you don't know the answer, don't hoax, tell them you will find out and get back to them.

> Use disclaimers, Most importantly use disclaimers, so that your contention doesn't backfire at you later. When you mention that equity generates superb returns, don't forget to mention the long term clause. Inform clients about the unpredictability, the potential loss that volatility can cause in short term investing.

The bottomline is, clients will be and should be asking you questions, some of them will be tough. So don’t be scared, rather prepare yourself with appropriate answers, which lies in the fundamentals of investing and the product, only the presentation required is different.

Corporate Clients - Gettting Them On Board

Tuesday, July 16 2019, Contributed By: NJ Publications

Client Segmentation has remained a popular approach to targeting customers. Client Segmentation means dividing the customer base into groups, because a group of people share certain unique characteristics which are commonly shared by all in the segment, so the marketing strategy can be aligned in accordance with those unique characteristics. Customers are segmented on the basis of various parameters like their age, income, education, nature of employment, community they belong to, etc. And one such segment, gaining popularity among financial advisors is the Corporate sector. Corporate Employees has become an attractive client base for advisors because of numerous factors like higher disposable incomes, a regular monthly income, annual bonuses, lesser reluctance in terms of preference for traditional investment options, etc. Many financial advisors want to develop their niche in the sector because of the above factors and also because of a huge customer base clustered at one place.

In this passage, we will share with you some tips on how you can go about targeting people working in corporates:

> Entry: Getting the first or the initial few clients in a company is the challenging part. If you have an acquaintance working in a company, he/she can escort you through the organization's portals. Or may be you have to look for someone, a friend or a relative, who has an acquaintance or a friend working in a particular company, can help you permeate.

> Social Media: You can also use social media platforms such as Facebook or LinkedIn to approach employees of a particular company. You might have some mutual friends on Facebook who can introduce you to your target. There are groups on LinkedIn which may have most employees of a company in the group, you can contact people from these groups.

> Seek Referrals: Once the introductory part is over, then referrals are the gamechanger. You must ask your clients to introduce you to their other colleagues and that's how you can expand your client network within a company. It is very important that you maintain utmost service standards, even if the clients have small portfolios. Your work will speak for you and will help you get more and more investors from the organization. If you ignore a small investor, a negative word of mouth can shatter your desire to embark on the company altogether.

> Partner with the Company: Organizations nowadays care for and work for their employees' welfare. You'll see companies running gyms, yoga classes, dance sessions, soft skills trainings, etc., to constantly upgrade their employees' merit and lifestyle. These companies are likely to welcome an opportunity which can impart financial security and mental peace to their employees. You can also research for companies having employee friendly policies and approach the HR head or top management of such companies and communicate your intention to advise their employees on their finances. But you must remember that your positioning matters here, you should be perceived as a financial expert who will transmit financial awareness among the employees and is here to bring about financial security in their employees' life and not as someone who has come to “sell” Financial Products to their employees.

> Conduct Presentations, Seminars: Talk to companies' HR's for conducting awareness sessions for employees like you can give presentations on topics like “Planning for Retirement”, or “Investing in Mutual Funds can be started with an amount as small as Rs 1,000 a month”, or “Creating an Emergency Fund”, and other personal finance topics, which are going to encourage more and more people to participate.

At the end of the presentation, don't forget to:

- Solicit for questions and feedback, if someone asks a question it means you have touched the right nerve. You can talk to these people personally after the presentation and discuss their query and the solution that you may have for them.

- Hand out your visiting cards

- Talk about the products and services offered by you.

- Follow up with the participants. You can share industry updates or personal finance insights with the participants through WhatsApp messages or E-mails, subject to the participants' interest. It is essential that you seek permission from the employees before sending mails or messages.

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Contact Us

Aarya Investments
Office Address:
Camelia - A, 1901, Vasant Oasis,
Marol, Andheri, Mumbai - 400059

Contact Details:
Mobile: 9930043704
Email: aparnapawar10@yahoo.com

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