This is a true incident that happened to me couple of weeks back. As part of our study circle (yes, I am part of one) I keep interacting with lot of IFAs. I met one such IFA who seemed to be visibly worried. I asked him: “What happened?”. “Kya batau Ronakbhai, ek bada SIP stop ho raha hai.” — came the reply
I asked, “How come”. He said, “Client had an emergency and wanted some money immediately. I told him that he also had some Insurance policies and he could get a loan as well. But he was adamant.”
On deeper thought I realized that it is because mutual funds are perceived to be very liquid. Unlike FDs or insurance policies. So, in an emergency, the first thing that comes to their mind is to liquidate the mutual funds.
He added “I wish I could convince him that the SIPs have a purpose. That they are linked to his daughter’s education and marriage goals.”
Although goal setting may seem like a far-fetched exercise, it can have great impact psychologically. So, next time around, when you are accepting a fresh lumpsum or SIP investment from your client, just make sure you seed the purpose of that investment in their mind. That will help you in building up a stable AUM.
All the best.