Cafe Mutual celebrates 5 years of Focus on Opportunity

Network FP Annual Conference 2012 gets bigger and better Team Cafemutual

Network FP Annual Conference modeled on the popular FPA conference held in USA ends on December 7th. Over 150 enthusiastic advisors and wealth managers from across the country congregated at the Network FP Annual Conference 2012 held in Mumbai. Themed ‘Problems are Opportunities’, the five-day event kicked off on 3rd December with workshops on global best practices for financial planners, wills & estate planning, life planning and mind mapping. Sadique and Priti Neelgund, the key people behind Network FP had taken care to develop an action packed agenda and invited a galaxy of speakers, international and domestic to do justice to the topics.  Shawn Brayman, President and CEO of PlanPlus Inc, Canada urged the audience to read research on financial advisory profession than reading ‘marketing material’ provided by manufacturers. Shawn is a winner of ‘Financial Frontier Research Award’ which is awarded by Journal of Financial Planning. Paul Resnik of FinaMetrica, Australia urged advisors and financial planners to prepare themselves for more regulation and de-emphasised alpha chasing. While Uma Shashikant gave her take on the likely direction of advisor regulations, Gaurav Mashruwala spoke about the emotional aspects of retiring clients. He said that mental health plays a much important role for retiree clients than money.  Suresh Sadagopan of Ladder 7 Financial Advisories talked about applying ‘Blue Ocean Strategy’ in financial advisory practice. Creating new demand/market rather than competing for existing demand is known as Blue Ocean Strategy.  Red Ocean strategy on other hand is competing in existing market. Sumeet Vaid of Ffreedom Financial talked about the advantages of seminar marketing (a strategy which he has used extensively) for advisors to acquire new clients. Sapna Narang gave an interesting perspective on developing a business model to offer wills and estate planning services to clients while Yogin Sabnis talked about nurturing and retaining talent in advisory business. Brijesh Dalmia from Kolkata guided advisors on implementing the right fee structure. He shared various types of fee models (percentage fee on AUM, profit sharing, fee per plan, fee per transactions and fixed annual fee) and their pros and cons.  Other interesting presentations were made by Lovaii Navlakhi, Vishal Dhawan, Dr. K.K. Goel and Rajiv George. Network FP also hosted a first-of-its-kind exhibition in India where around 20 software and technology solutions providers showcased their offerings to for advisors and wealth managers. The conference ends on December 7th with a ‘Planners Connect’ program, modeled on FPA Annual Conferences held in USA. In this program, outstation delegates would get a chance to meet with top practicing financial planners in Mumbai. Delegates would get insights on how these successful financial planners are running their practice. The event has turned out to be an ideal platform for financial planners to learn, network and bond.    network fp | uma shashikant | gaurav mashruwalla | suresh sadagopan | blue ocean strategy | fpa | kanak jain |

Cafemutual welcomes your comments. Any disagreements or criticisms must be expressed in a dignified manner. Thank you.

SELLING INSURANCE IS A NOBLE PROFESSION

SELLING INSURANCE IS A NOBLE PROFESSION

Authored by: Ajit Panicker

 

Insurance is one highly paid job and one of the biggest income generating business for all those who are directly or indirectly involved with this profession. Talking about this profession and even having worked in this trade my experience has been really good as a salaried employee and at the same time now a practioner and self employed in financial planning, this give me the following every single day and one attribute in my personality get added because of it:

1.New Professional relationships

2.Excellent professsion of socializing

3.Great Netwoking business

4.New ideas and thought process gets ignited everyday

5.After becoming a regular visitor to the client , i get involved in making them take small decisions, so become an influencer.

6. Trust worthy friendship

7.New type of meals at different clients residence or office.

8.New learnings in varied industries, 

9.Learnings about the national, international scenarios on different topics.

These are the few attributes which i add on a daily basis, many apart from these have not been discussed as the blog would fall short to write all advantages, what i basically want to express, is that the insurance agents, managers and officers are not DO NOT COME NEAR ME beings, they are all humans and believe in doing social service .

They are helping you understand the importance of insurance, which is , that the insurance need is not for the person who is living , it is for the people who would be left behind when the bread earner of the family has gone.

So friends let's welcome the people involved in insurance as social workers involved in a noble profession, because they are insuring your lives against probable unseen risk.

24 Mar 2013 06:00 PM How can an IFA build a clientele among women investors? Pallabika Ganguly

A different approach is needed to acquire and manage women investors, say financial advisors. Women face a number of unique risks -- longevity, gender-related illnesses, care giving responsibilities, etc. And so naturally, when it comes to money and investing, women take a different approach to meet their financial needs. Cafemutual spoke to some renowned women advisors to know what it takes to build a successful practice among women investors. The first thing that financial advisors recommend is to identify and segregate women clients in two different categories - married, divorced or widowed women. For a married couple, an advisor needs to adapt a different approach while handling their investments. Engage with the wife and draw her in the decision making process. Many IFAs make the mistake of blindly assuming that the husband is the sole decision maker and/or the wife is uninterested in investments and financial planning. More and more women today are interested in participating in decision making that affects the future and well being of the family. So, the successful financial advisors suggest that it is the advisor’s duty to see that every married woman should be aware of the basic information, such as the need for a legal will, details of investments made by her husband, contact details of the financial companies from where investments have been made and bank account details etc. She should also be aware about the investments made on her behalf by the spouse. If the client is single or divorced or widowed, the advisor should be sensitive to a few concerns on retirement planning. According to Dilshad Billimoria, IFA from Bangalore this category of clients is comfortable working with female advisors, since issues of independence, financial freedom and financial security are sometimes better understood. She further adds, “Women want to be heard and considered on par with men, especially, the unmarried and educated category. If an advisor is able to spend time and effort in listening to their problems, which are non-financial sometimes, it could create a pathway of trust for lifelong relationships.” Secondly, advisors should balance risk with stability. Most women are focused on stability as opposed to growth. A few overseas studies suggest that women are more risk-averse and therefore may not be properly diversifying their investment strategies. Advisors should convince them to take some risk as it is essential for building wealth. A growth and income strategy should be applied to a broad diversified investing plan over time. The earlier that growth and income strategy is developed, the more likely it is to generate healthy yields in the future.  Shifali Satsangee, a financial advisor from Agra tries to make women clients realize their true financial potential by encouraging them to start investing early and promoting goal based consistent and disciplined investing. Finally, an advisor should quarterly spend ample amount of time with their women clients trying to explain them in details their portfolio performance and future growth of their investments. Advisors can also profit by conducting women-oriented financial literacy programs in universities, work places and ladies clubs. For instance, Shifaliconducts financial awareness programs in universities for teachers and students. “These programs serve the dual purpose of financial inclusion of women and also enhance our chances of adding new clientele to our firm, “says Shifali. Another IFA,Tejal Gandhi often conducts investor awareness programs in ‘ladies clubs’. Advisors would do well to recognize that women investors have a greater desire for independent, personal and easy-to-understand advice with their finances.   IFA | women advisors |

Cafemutual welcomes your comments. Any disagreements or criticisms must be expressed in a dignified manner. Thank you.

CFP group in Kolkata takes to the streets - Pallabika Ganguly

The campaign receives a positive response, as prospects discuss their financial needs with planners. 

In a bid to create interest among investors about financial planning, a small CFP group in Kolkata conducted a road show on Sunday. The group put up a stall announcing a ‘Personal financial health check-up’ in a prominent location that attracts a huge holiday crowd.

The group answered a number of queries from investors and explained to the audience the difference between CFPs and other financial professionals. “Our main motive was to reach a new bunch of investors and explain to them the importance of a financial plan.We discussed their financial problems and offered solutions,” says Subhabrata Ghosh, a CFP who was a member of the group.

The group met many investors through this exercise. Pamphlets were also distributed, which helped the group to understand the financial needs of the participants. The pamphlets also had a few articles on financial planning.

Interested prospects had to fill up forms so that the CFPs could evaluate their financial background and understand investment needs. The meeting met with a satisfactory response; most of the people who attended the show have been contacting the CFP group to discuss their financial issues. The CFPs expect to attract more investors as they are planning more such meetings. 

“People were interested in listening to us. This was our first effort in Kolkata; we are planning to hold many such meetings on Sundays at different locations across the city,” says Subhabrata. 

Life of Advisor = Life of Pi who had to live with Richard Parker Suresh Sadagopan

Pi lived with a Bengal Tiger (Richard Parker) and its time we learn to adapt ourselves to regulations.

Adaptation is an evolutionary process where an organism or species changes over time due to what it encounters in its environment. If it is a slow evolutionary process, it will not be noticed and the pain will be very less or not there at all. However, fast paced change can be unsettling. That is the reason why most people don’t like change. Change involves moving from one’s comfort zone to another, which is unfamiliar and hence unsettling. But change is inevitable and is like a tidal wave… it is for us to reconcile for ourselves that we cannot fight it but instead harness it for our betterment.

Many of you might have seen The Life of Pi. Pi’s life goes topsy-turvy literally, in the middle of the ocean, his ship sinks and he finds himself in a small lifeboat. He finds a Bengal tiger (Richard Parker) too in the boat and he is terrified. He builds a makeshift raft to escape the tiger. But he finds that he cannot abandon the boat. He has to feed the tiger and ensure that it does not eat him; he slowly learns & trains the tiger by using some techniques which keeps the animal, in its corner. They learn to live with each other. Over time they surmount several challenges along the way and after 227 days, their boat washes up on the coast of Mexico.

Pi’s situation was very difficult indeed. But, he learned to live with it… with a tiger to boot!

Now, we are experiencing change in our field. Many of us plunge into the abyss of sorrow and self-pity and are not willing to acknowledge the inevitability of change. Whether we like it or not, the Investor Adviser regulation is a reality. It is our Richard Parker! Now, how are we going to live with it? How are we going to benefit from it? Those are the questions that we need to answer.

The regulation is indeed a sea-change in the way we need to operate. In one fell swoop, we will all have to operate only on fees. The disconcerting fact is that there is not much time to adjust.

Instead of navel gazing, why don’t we dispassionately look at the regulation? Is the direction right? I would say so. It is inevitable as there seems to be a convergence of opinion across the world on this. Now, let us not start debating how unfair all this is, as all regulations are coming only in the financial services space. But, the 2008 problem emanated in this space and hence the regulations are also focused on this area – is it any surprise?

Will it benefit the clients?

Yes & no. This regulation sets a high bar and hence the Investment adviser (IA) should be someone who passionately believes in a consulting practice, is committed and willing to take a long-term view. Clients will be able to get good quality advice, if they are able to find investment advisers.

But the number of investment advisers is going to be miniscule for a long time to come, primarily due to the challenge of earning a viable income. Compliance, reporting & the attendant costs as well as the higher benchmarks for education/ experience, can also serve as a barrier.

What are the challenges for us?

• Cost of operations will go up, with registration compulsory for the investment adviser and their employees.
• Cost will also go up due to the kind of people one will not be required to recruit – PG degree/ diploma holders or graduate with five years of experience and with CFP or similar certification.
• Giving up the distribution income is not really a possibility for many, as this income is the main income source. Fee income is miniscule or non-existent for many of them.
• The advisory process/ reporting/ record keeping requirements are of a considerably higher order for investment advisers, which will entail significant investments in terms of time, resources, manpower and hence money. Costs are going to go up due to this too.
• The investment adviser has to be audited for compliance. Also, in case of a firm, a compliance officer would be required.

What are the problems that this regulation creates?

It excludes many from the purview of the regulation – like insurance agent, MF distributor, stock broker, CA, lawyer etc. Now, if protecting the clients is one of the important objectives, excluding so many from the purview of regulation and allowing them to offer incidental advice is not really meaningful. Investors will still get advice from various sources and may not be able to distinguish between an insurance agent, stock broker and an investment adviser.

Not many will register as investment adviser. Investors will have little choice as number of IAs will be very low.

This regulation does not expressly ask others to use designations that reflect their work, like stock broker, MF advisor, insurance advisor etc. Since, IA regulation is silent on this, anyone can call themselves anything – from financial architect, financial strategist, financial planner, money manager, wealth planner, financial coach etc. - all of which sound far more impressive as opposed to Investment Adviser and hence can sway the lay investor.

If a person is willing to register as aninvestment adviser, would they have to give up their trail commissions from insurance, mutual funds etc.? This is not clear and be a big problem for those who have built up significant income, over time.

Lack of clarity is another of the problems. What does arm’s length mean? Can a separate independent division be in the same office?

How to tide over the problems and become Investment advisers?

As it is, the regulation allows one to have Separately Identifiable Department in case of corporate entities. Similarly, separation of business will have to be done in individual cases and proper disclosures need to be made, when one deals with investors. It will be difficult but not impossible.

There could be big problems for Insurance Advisors, who may have to come under a corporate setup for ensuring their trail. Even then, problems would be there that need to be ironed out.

The other problem to be surmounted will be to inform clients about the regulation and the need to charge them for advice. This would be a long and arduous process, which may have to be done, one client at a time. But, it has to be done.

Why is it necessary to consider becoming an Investment Adviser?

It certainly is a difficult proposition to become an Investment Adviser. But, this is the direction in which the world is moving. The commissions to which most of us want to cling to, will disappear probably in the next three years, across products. It has already happened in UK & Netherlands now and is expected to happen in a whole host of countries this year. So, in future, we will anyway have to charge for services, much like a doctor or a lawyer.

If doctors, lawyers, architects etc. are able to live only by fees, is it too difficult for us to emulate that? I would only say that things are difficult for us, but once we get over these teething troubles, it will be much better for all of us. We will have to hunker down and survive this blizzard.

So, instead of being in denial, let us move forward and embrace change. This is just the beginning. It is like Pi finding himself with Richard Parker in the boat. We have a long journey ahead and storms to face and survive in future. Pi had remarked –“Richard Parker – it is because of you I’m alive. You keep me alert day and night and ensure that I lived all these days”. When there is no alternative (TINA), people do things which are otherwise unthinkable.

Let us reconcile ourselves with the regulation and learn to live with it – like Pi. His journey was so fantastic – the fantastic glow of neon algae in the middle of the ocean, dolphins jumping about, a blue whale surfacing or a carnivorous algae infested island – that the journey itself became the highlight. Reaching the shore, he did. We would also one day reach the shore and live to tell our tale of adventure. But, let us also enjoy the journey – it may actually be a fascinating journey of courage and conviction, which we would look back with pride.

This article was originally published by Network FP.

A client advisory board can help advisors grow their business Ravi Samalad

Advisors overseas use client advisory boards to get structured feedback from clients. Though, the concept is new to India, it is worth implementing    Client advisory board is a group of your most engaged clients appointed by you to give you a structured feedback to help you achieve your business goals. Just like companies appoint independent directors on their board, advisors can appoint, say, seven clients who will meet thrice or four times in a year to give them feedback. Though an alien concept in the Indian financial advisory community, it is a well known practice internationally. Currently, advisers rely on the informal and sporadic feedback from their clients to devise marketing strategies and communication. However, it may not prove to be effective all the time. A structured and specific feedback would help you devise your communication and strategies properly. A client advisory board becomes relevant in this context. You may choose to appoint clients whom you consider are ‘most engaged’ and represent your ideal client profile to be a part of your board. However, a word of caution - the feedback received from the board, if it is strategic in nature, may go against your vision of the business. So, the first and most important step is to set the objective and agenda of your board meetings right. Stephen Wershing, author of ‘Stop Asking for Referrals’ says that it is best to engage a third party facilitator to conduct such meetings. Internationally, there are agencies which facilitate and help advisers organise client advisory board meetings. According to Stephen, engaging a third party to conduct such meetings is effective since some clients may not want to express their concern or criticize you directly. Thus, engaging a third party brings neutrality to the whole process. While engaging a third party entity to facilitate such meeting may not be feasible for all advisers, here are few tips to guide you to set up an advisory board. Shortlist a group of your most engaged and ideal client profile Try to appoint clients from different professions so that you can get varied perspectives Define the scope and objective of your board Keep the number of members limited; say seven to ten, which would again depend on the type of your organization Rotate the members every two or three years  Ask more specific questions in your feedback Getting feedback from an advisory board is found to offer several advantages to advisers, including getting referrals. It shows that you care about your clients and are willing to improve your services to meet their expectations. So while advisers in India may find it initially difficult to get their clients to be a part of such initiative and the process could consume time, money and resources but the concept is worth exploring.

Cafemutual welcomes your comments. Any disagreements or criticisms must be expressed in a dignified manner. Thank you