As a financial advisor, you play many roles, you advise clients on how should they be managing their money, goal planning, which products should they be investing in for their short and long term goals, portfolio review, etc. The role of a financial advisor includes, but is not limited to the above, in fact the horizon is huge. Many advisors limit their scope and end up playing the role of an investment product provider. The idea behind writing this article is to demonstrate to you the need to look at the big picture, and have a holistic view of the client's profile and portfolio.

Amid the plethora of investment products and providers available, what's going to make you stay here for the long run is being irreplaceable. The investor shall look up to you with trust and must place confidence in your abilities. It is very important that we as service providers review our roles and responsibilities so as to align with the changing customer needs, and to ensure that you are always adding value to the investor's life.

So, here are some uncustomary and equally crucial roles that a modern day financial advisor must play for their sustenance as well as for an overall development of their clients:

>Financial Mentor: One of the most crucial roles to be played by a financial advisor is that of a financial mentor to his/her clients. The need of the hour is that you are your client's personal financial coach, teaching the investor lessons on the basics, like spending, saving and investing, guiding him through various facets of investing like Why to Invest? When to Invest? Where to Invest in?, etc. The idea is to stand by and lead your investors into a secure financial future while preventing them from making the most common investing mistakes that most people make.

>Imparting Financial Education: An advisor's job neither begins nor ends with "Sale". The sale should be there, but it is supposed to follow the various other important aspects, and one of the most vital elements among all is Educating Investors. Before you place your product basket on the table, it's essential to familiarize the investor with the fundamentals, the need for Diversification, Goal Planning, Asset allocation and Investment Horizon, Risk Adjusted Returns, etc. The Why must be taken care of before the What. When the investors have a clear head, it instills investing confidence in them, and it is good to have investors who are aware. You would not have to repeatedly spend time in convincing them for investing, they would understand the need and act as per advise. A lot of questions and explanations can be avoided later when the Why factor is catered to in time.

>Behaviour management: Another crucial aspect of financial advisory is managing investor behaviour. Actually a significant portion of this element is taken care of by the above point, "educating your investors". Investors are generally scared of volatility, a sudden rise or fall in the markets trigger their emotions, which is evident in their behaviour, and they tend to take wrong investment decisions. So, your role as an advisor is to hold the investors' hands and remind them that volatility is normal, the investor is here for the long run, that their life goals can be affected by a small wrong decision. There is a need to consistently stir their memory and revive the basics.

>Assessment of their needs: A financial advisor must have a broad perspective while dealing with their clients. Because of your knowledge and experience of the industry, you would know a lot about your clients' investment needs, their risk taking capacity, and investing requirements, sometimes you would be able to see their footing better than how they themselves would see. You should be able to perceive the risks that the client may face in the future. It is not just about explaining the importance of goal planning and investing to them, you must help the investors identify their goals. You must have that foresightedness, so that you can advise them for what is right for them, and not what they ask you to do.

>Holistic View: As an advisor you need to have a holistic view and offer comprehensive solutions to the investor. It is very important that you not just concentrate on the investment under consideration but also take into account his past investments, his business, job prospects, personal preferences and family needs, tax matters, etc., before working on his financial plan and investing. Here, you must note that your roles must be refitted as per individual clients. There may be some who may need their advisor's roles to be limited or different. For instance there is an HNI client who needs you to do his financial planning and help him invest, but he has another person who looks into his taxation aspects, so here you need to restrict your role to advisory only, and not poke into his tax planning.

To conclude, a unique characteristic of every business is environment is constantly evolving, and with this evolution the needs and expectations of the investors. Therefore, reviewing our roles is an ongoing process, because the existing roles need to change and upgrade as per the market need. There is a need to get out of the comfort zone, the need to think and provide services out of the box, the need to exceed expectations. You have to evolve from being a conventional investment advisor to a trusted financial life partner.

A large part of a financial advisor's life goes in convincing investors that they must plan for their goals, secure their future, that they should write a will, that they should timely plan for their estate transfer, and the like. And being a part of the industry, being so close to the harsh reality of life, you all too must have shielded yourself by investing for your goals. You want to ensure that even when you are not there, your family's goals aren't compromised, so you must have secured your family by taking an adequate term plan.

But have you ever thought about what's going to happen to your business, who is going to take care of your clients' portfolios and goals, in case of your untimely death or disablement? Remember, you have promised them and yourself that you will empower them by securing their future and will work towards timely fulfillment of their goals. If you are also amongst those advisors who have not yet thought about what will happen to your advisory business when you are not there, then you must start thinking now. The reason why you should have a continuity plan in place as soon as possible, lies in the answers to the following questions:

In event of your sudden death,

Who's going to take care of your clients' needs?

What will be the source of income for your family?

What about your employees?

Not having answers to these questions will prompt you to take the first steps in this direction.

For securing your family's income, you must realize that simply naming your nominee may not be enough. Say for instance, your wife is your nominee, now in case of your death, your AUM cannot be transferred in your wife's name until she has a valid ARN. She will only receive the trail commission till the time the AUM is not exhausted. So if your wife wants to steer your business, she must have an ARN so that she can initiate the asset transfer process. Hence, the first thing to do would be helping your nominee take and pass the AMFI exam and get an ARN, thus making him/her eligible to take over your business. Further, it is also advisable that you groom the nominee or any other family member whom you think would be suitable for running the business, with business techniques and processes, educate them about the product and the industry, familiarize him/her with your clients, thus preparing them to take the helm in case of any eventuality.

When you take a term plan, you are covering your family with a financial shield, you are assured that your loved ones will have means to survive, maintain their standard of living and meet their goals in life. The term policy imparts mental peace to you. Similar is planning for continuity of business, it's like an insurance, a policy to look after your clients and family in the worst case scenario. Many advisors, in fact have realized the importance of insuring their business' future, and have adopted unique strategies to safeguard their clients' and family's interests in their absence. Some of them have prepared their family members for the takeover, some have plans to distribute the AUM like they distribute their other assets among their kids, some of them have plans to sell the business to another advisor, or maybe partnering with someone to keep the business going even when the advisor is not there.

Also your clients may not ask you directly, but they do wonder as to what will happen to their money and financial plan after you. So, just having a continuity plan is not enough, it is essential to communicate the same to your staff, family members and clients. You may not want to get into too much of details here, yet the idea is that your people must know what to do and whom to approach when all of a sudden you stop turning up.

To conclude, your business may outlive you, and providing for it's survival will impart mental peace to you. To ensure that your clients' interests are protected, and your family's income is not disrupted, in event of a mishap, it is critical that you plan for continuity of the business immediately.

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We apply numerous strategies for growing and strengthening our business, we continuously engage ourselves in activities directed at evolving ours into a successful practice. But have you ever thought about growing your business in-house, that is by engaging your kin with you. Surely, many advisors, at the back of their mind wish that their sons or daughters support them and down the line take over the legacy. So, to actualize your figment of imagination, you must take concrete steps in this direction.

It's great if you have someone from within your family to carry on the legacy, you will have someone to support you in taking your business to newer heights, you will have enough time to groom and train him/her and develop a perfect fit for taking over the business. Moreover, in case of your untimely death or permanent disablement, you can rest in peace as there is someone who will look after your business and will ensure uninterrupted flow of income for your family.

They are likely to be more tech savvy, since they belong to the millennial or the Gen – X era, and their love for technology can contribute significantly to your practice, since it is an undeniable fact that to grow in our business, technology is your best friend.

And it's not just about you and your business, Financial Advisory is a great career option for your kids to pursue. As per a recent Cafe Mutual press release, “Of the total 134 crore people in the country, the mutual fund industry has 2 crore unique PAN indicating that the industry has 2 crore investors.”, and these numbers are after the spectacular growth the industry has witnessed over the last few years. So, the penetration of Mutual Funds in India is really very low, and it has just started to grow, clearly outlining the opportunity lying ahead. By involving your kids with you, you are setting a terrific career path for them and preparing them to capitalize on the opportunity.

So, we will share with you insights on how you must go about nurturing your kids, so that they evolve into ace financial advisors.

Start Grooming them from Adolescence: First thing to do in this direction would be to start mentoring them from an early age, like between 12 to 15. At this age, kids are capable of understanding finances, basics of savings and investing, life goals, etc. and are generally more receptive. If you postpone the process to when they are in their early twenties, chances are they may have developed an inclination towards a different career option. The idea is not to keep them from pursuing engineering or MBA, but to at least extend the opportunity for cultivating an interest in and pursuing financial advisory as a career. Starting early can also help kids in choosing their subjects and courses, which can tune in with their career later.

Educate them: Knowledge is probably the most indispensable component of financial advisory, along with sales skills. A 15 year old may not be able to go out and sell investment products, but you can equip them with the required literature and prepare them for the time to come. You can educate them about the basics, like importance of investing, concept of planning for life goals, inflation and real rate of return, the basics of Mutual Funds and why investors should invest in them, etc. You can also give them financial magazines, books, links to financial blogs, etc., and amidst this training you must encourage them to ask a lot of questions, so that they have a clear thought process about the products and the industry.

Relationships: Try to establish a relationship between your kin and your clients. You can take them along for client meets, so that they are live witnesses to the queries and concerns the investors may have, and how do you address them. You can take them to your office sometimes. The idea is to make them comfortable in the business environment, acquaint them with the ways and techniques of work, and also gradually introduce your clients to their future financial advisor. These activities will also give you an opportunity to assess the progress of the kids to ensure that their activities are in alignment with your ethics and vision.

So to conclude, sculpt your kid into one who shares the same passion for advisory as you do, understands and can imbibe the values and ethics with which you conduct business, to be your Partner in your growth. Nobody is born a businessman, most of them have to struggle to make way for themselves. Your kid is born with a golden spoon, he/she has the leverage of a set business, which he/she has to grow, and not start with zero, while you have their back all the time keeping them from falling.

Nobody likes to take risk, but the irony is the lower the risk, the lower the gain. Risk and Rewards are directly related, some of your clients understand this paradox and are willing to take calculated risks, while others just do not want to get out of their comfort zones. Either they are too reluctant to invest, they want to keep their money safe in their cupboards or max in their saving accounts. Then there are others who stretch their limits max up till fixed deposits or other sovereign backed fixed income instruments, and few go for life insurance policies that offer fixed and poor returns.

Many of us have clients who form a part of the above league of conservative investors. Their portfolios are highly inclined towards traditional low risk investments and lack diversification.

In the short run, may be due to market volatility their conservative portfolio may fare better than mutual funds, but in the long run, when the volatility gets neutralized, the latter will supersede the former by generous margins.

This article is about the above genre of investors who need to know about how their investing habits are gnawing at their future goals bit by bit.

How much they have lost over the years: Conservative investors see the returns on an absolute basis, a lakh has tripled to 3 lakh in 15 years, what they generally don't see is the bigger and true picture, which you need to show to them. No doubt 1 lakh has increased to 3 lakh, but the market value of 3 lakh does not remain the same 15 years hence, it may or not be even worth the original 1 lakh. This happened because of inflation, prices of many consumer goods and services has more than quadrupled in the last 2 decades, hence these investors might have actually lost money. If in case the investor would have invested this lakh in a diversified equity fund, assuming a modest rate of return of 15%, his lakh would have translated into about 8 lakhs, more than double of what he got from his FD.

How much they will be loosing in the future: If the conservative investor continues to play safe for a long time, he would be hampering his future too. If this investor still invests in fixed income products (the returns for which are consistently falling in the recent past), then it may reciprocate to under fulfillment or non fulfillment of goals altogether. Let's say a 45 year old conservative investor has Rs 40 Lakhs and he wants to invest this money in a way that he has Rs 15 Lakhs for his daughter's wedding after 5 years and Rs 1.5 crore for his retirement after 15 years. Now being a traditional fixed income investor, he invests Rs 12 lakh in a five year 7% FD, and the remaining 28 lacs in a PPF account. This investor falls under the 30% tax slab, and after 5 years he gets Rs 15.25 lakhs for his daughter's wedding (after deducting taxes). However after the next 10 years, his investment puts him to shame, even after yielding tax free returns, his PPF investment gave him Rs 0.89 crore, which is nowhere near his target. If in case this investor exposed his money to some risk for the longer term goal and invested in a diversified mutual fund for his retirement, instead of the PPF, then the scenario would have been different. Let's say the Mutual fund gave him a 12% tax free return, he would have got Rs 1.53 crores from his Mutual Fund and he has already met his daughter's wedding goal from the FD. Incorporating some equity into his portfolio for long term goals have helped him achieve both his goals.

To conclude, many advisors encounter such investors who are very difficult to be convinced for modern products. It is indeed isn't easy to enter into their territory, but it is not impossible either. We need to show them the true picture by giving them an account of the losses they are incurring year after year, supported by facts and figures, followed by other important investing ideologies.

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