Each financial consultant has to decide what type of an adviser he is. Of course every adviser gets different types of clients…and he will change accordingly.

Type 1 client:

Here the financial adviser acts like a dictator: He tells the client ‘look I am telling you to do this, so please do’. Here the adviser (assuming he has done a good job) has done the clients need analysis (or it is a very simple client), and the client loves to listen. This is the family doctor kind of a position – I treated your grandfather, parents, and now you. I know what is good for you, and what is bad for you. Take the red pill 3 times a day, and come to me after 3 days. Simple, the adviser acts like a doctor of yesteryears. You went with the symptoms and he gave a solution.

I have a few peons, security guards, drivers, who do SIP and just do not know what, where, why, the money is invested. When they look at the statement, the only thing they tell me is “I never thought that I will have Rs. 100,000 EVER in my life but now I have Rs. Rs.  434,000…….all because you asked me to invest Rs. 500 a day”…this amount then grew..and the markets did well…and grew”.

Such clients do not calculate IRR, do comparative analysis, etc. They are happy that they were forced to save Rs. 500 per month in 1997, then Rs. 1000 in the year 2000, and Rs. 2500 in 2015. That is all. Once in a while if there is an emergency they will make a polite request ‘I need Rs. 10,000 for …. can I withdraw’. That is your call. Depending on the need / availability…etc. you can decide.

ONE has too much of responsibility in such a relationship (I have offered capital protection to a few of them for them to kick start the campaign!!)…

The second type of Customer:

He/she has to be given a lot of information about what is asset allocation, types of funds, difference between funds, schemes, etc. These people expect information and some hand holding too. You cannot give them the red pill. You have to show them the red pill, blue pill, and explain the difference. Client is capable of asking for features, needs,…etc. and then choose the red pill. So the facts have to be arranged in such a way that he picks the red pill. Remember the magician who tricks you into picking the wrong card? You need to do the same thing. Make sure that the client picks the right fund and then tell the world “I pick my own funds” . Amusing to see some of them pick the WORST fund (RMs get the highest weightage for that) with the highest charges.

RMs and other advisers feel happy about the decision – the responsibility is with the client, and commission is with the adviser!

of course there are more…lets keep it for a later post…