Having a Client Centric Approach is indisputable for running a successful advisory business.
Client Centric Approach can be broken down into: Client + Centric.
The subject is self explicable. This means the client is at the centre of the business: the policies, operations, products, services of the business all revolve around the client. The well being of the Client determines the existence of the business, in this case, the Financial Advisor. If the Client is pushed away from the Centre, the role of the Advisor becomes a question.
It is not just about advisory, rather it is applicable to any other business. Businesses who have adopted a client centric approach have outperformed their competitors. In our business, however not having a client centric approach is not an option. It is about how efficiently you apply and practice it.
Having a Client Centric Approach, is what most advisors try to inculcate in their business practice. However, what actually happens, is another point. When you dig down deep, you'd realize that what you have been doing was not Client Centric, rather it was Client Focused.
What is the difference between Client Focused and Client Centric?
There is an investor Harish, aged 50, working in a mid level position in a government company. He is a father of a 15 year old college going son and a 24 year old daughter and his wife is a home maker. Harish has been a traditional debt investor, he has been investing in PPF since he started his career, and he also has certain Fixed Deposits. Harish lives in a 2 bhk flat in navi mumbai and owns a 2 bhk flat in a small town in Madhya Pradesh, which he intends to sell to fund his daughter's wedding.
Now Harish wants to invest for his son's higher education and he also needs a medical Insurance of Rs 5 Lacs, which covers his entire family, he is a little confused about where to invest. So he needs a financial advisor to help him.
There are two Mutual Fund Advisors: Manish and Ashish. Let's see their approach towards the client's requirements.
Harish meets Manish:
Harish discusses his financial position and his requirements with Manish. Manish carefully listens to the investor's requirements, he sees that the investor's goal is 3-4 years away, and he suggests him to invest in ABC Balanced Mutual Fund, which is a good performing scheme. Manish also suggests him a good Life Insurance policy, which fulfills his requirements. The advisor has given a well researched, honest advice and the investor is very happy as he got what he wanted.
Harish meets the other advisor Ashish:
Again Harish discusses the entire background along with what he wants with Ashish. Ashish too carefully listens, but he has a different advise for Harish. Ashish on analysing the investor's financial position sees that his entire portfolio is concentrated in debt and real estate, and is totally illiquid. So, Manish has the following solution for his client:
Firstly, they decide an ideal asset allocation for him, based on his profile and his risk taking ability. He suggests liquidation of a few assets and investment into some other assets to match the ideal asset allocation. He also suggests him to start an SIP.
Secondly, Ashish sees that Harish is planning his daughter's wedding in a year or two, so he suggests him to sell the property and keep the money in a liquid asset class, like a Liquid Fund, since if he waits for the last moment, he may not be able to find a buyer or a good deal on his property.
Thirdly, Ashish sees that a family medical cover of Rs 5 Lacs is not adequate for the investor. So he suggests him to take a medical insurance of Rs 5 lacs plus a top up policy of Rs 10 Lacs. He also suggests him to take a critical illness cover and an accident cover.
Now, both advisors helped the client by suggesting good investment products. The difference was the first advisor Manish catered to the investor's wants and the second advisor Ashish catered to the investor's needs. Manish had a Client focused approach, his advise met the client's expectations. He said what the client wanted him to say. Whereas Ashish's advise was Client Centric, he looked under the hood, and saw what the client actually needed, which even the client himself didn't know, and gave a solution to those needs. A Client Centric approach will ensure that the investor will get what is right, it will deliver him a superior investing experience. And what's right for the investor, eventually is right for the advisor too.
Though the difference is very loud and clear in this example, but practically, many times there is a thin line between the two, and you many not realize when you cross that line and change your focus to Client at the Focus from Client at the Center. So, you as an advisor, must always look back to see that whether your approach towards advising clients is Client Focused or Client Centric. Client Centric Approach will help your investors, it will ensure that your clients will come back to you and will make you a successful financial advisor in the long run.
