https://www.youtube.com/watch?v=qyQqTGxw8bs

These are tough times – and it is in tough times that relationships are tested. Oddly it is in tough times that many advisors report a growth in their business too! Covid-19 will take its toll on many businesses and that includes the advisory business too.

So let me tell you some of the things that I think good advisors should be doing (I am sure many of you are already doing this…)

1. Asset allocation – sitting with each client and doing asset allocation. AA is so specific to each client that you must pay a lot of attention. For a client in direct equity the fall in the portfolio could be different from what it is for others. A friend with tons of options in a top pharma company…HIS NETWORTH HAS GONE UP substantially in the past 60 days. Obviously I pushed him to keep selling his shares and put that money in a mutual fund. Just changed the fund into which he was putting. It is a value portfolio without much of pharma in its portfolio. So do AA for clients depending on their needs. HOWEVER FORCING clients to sell asset classes which have currently lost money or selling a rising star is not easy. Takes a lot of conviction. Yes client could feel bad but it is still much much better than telling him after 6 months “I told you so”.Idiot you did not tell it LOUD enough.
2. Conserving cash: Many clients / friends are unhappy with the amount of cash in their portfolio. However, if a business is doing poorly (or is expected to do badly post Lockdown), a person has lost his job, or a person is unwell, or a person is over-paid in a difficult to get a job scenario – THE VALUE OF CASH CANNOT BE UNDERPLAYED. Yes, take the angst and hold on to 2 years household expenses (including emi) in liquid / short term  funds. Take a call after things improve. Looking like an idiot in the short run is useful if you want to look intelligent in the long run. Look at Naren or PJ how often they look bad in the short run!! That’s guts.
3. Behavioral Mistakes – read books on behavioral finance, and make sure that clients understand Survivor bias, Overconfidence bias, etc. Holding back a client from putting more money in an asset suggested by YOU is so damn tough! Imagine you got your client to buy Biocon when it hit Rs. 270, and is now at 355, and now he wants to put another Rs. 1 million…stopping him is a challenge. Based on his cash availability you had suggesed Rs 1 million, now he wants to put another Rs 1 million at an elevated price. Skill lies in holding the reins and the stirrup!!
4. Keeping the client informed about the costs, the services, the value that you are adding, etc. Make sure that your client knows that YOU are being pushed to tell you “do not stop the SIP” – OF COURSE this makes sense from the money accumulation point of view, but does his cash flow permit him/her to do that? Be realistic. Tell him that more important than SIP are his term insurance premium, medical insurance premium, children school fees, etc.
5. Nudge the client to good reading…it helps to have a well informed client. So obviously nudge him towards www.subramoney.com – both blog and YT channel…!!!

https://www.youtube.com/watch?v=J1UbHXsBEqs

lage raho…..