Over your career as a financial advisor, you must have had answered to tons of and different sorts of questions. You must have observed that people ask a lot of questions when it's about 'money', and it's such a sensitive subject that it'll bring an introvert of the highest order to talking. These questions not only come up from your clients but from friends, acquaintances and even strangers. After all, they too are your prospective clients. Your profession is such that your presence is seductive, a relative's relative would barge in out of nowhere at a wedding, and a meteor would be thrown at you directly from the Milky Way. You'd be thinking aloud, “Bhai let me at least finish my gulabjamun, before asking for setting your finances right in 5 minutes”. People expect an advisor to be a financial guru, a powerhouse of financial information, and having an instant solution to all their investment hurdles.
We are prepared for such situations and questions from our clients, there are the same conventional questions; where should I invest for my retirement planning? Why should I invest in Mutual Funds, what's wrong with my FD investment? Why a modern insurance over a traditional insurance? The answers to these questions is your expertise, you have heard and responded to them time and again, there are definite facts and figures to support your contentions which are often enough to convince the client. However, sometimes the questions carry a surprise element, or something which you don't have an answer to. These fall under the category of 'difficult questions', and the motive of writing this passage is to acquaint you with these probable 'difficult questions' that you might face.
Here are a few questions which can put you in a dilemma, so be aware and prepare yourself for any pleasant or otherwise surprises.
Q What if you or the distributor or the fund disappear? Many clients are skeptical about the sustenance of the financial advisor or the distributor, etc. They have doubts about what if the advisor or the distributor close down the business unanticipatedly or what if they die. Whose doors will they knock for their money? The answer to this question lies the strength of the MF structure, the strict regulatory framework and an unblemished history. So, acquaint yourself with the structure and regulations and be ready to shove them at the client, when needed.
Q Share Market is a Satta. My so and so lost lakhs of Rupees in the market? How will I make money? May be the so and so was naive, he/she didn't invest in Equity Mutual Funds but in direct Equity, was mislead, fell prey to market sentiment, anything could have have happened, and the loss has struck terror in your client's mind. Familiarize yourself with the background, which when sculpted and presented well, will be the answer to the question.
Q You said the fund has generated 20% return on an average historically, why did I get 12% only? That 20% was historical, and history may or may not repeat itself. But if the investment is given enough time, it is capable of surpassing history.
Q How do the markets look like? Do you see they'll continue to upsurge or will take a U-turn? Or which one is a better stock A or B? You are not God, but you can't tell that to the inquisitor blatantly. The art here is to convey the oblivion in the most diplomatic manner.
Q On what basis do you decide I should invest in this product?
A whole lot of research, hard work, experience and continuous learning goes into ascertaining the wisdom to be able to determine what's right for the investor. On the basis of the virtues mentioned and conviction in the quality of the product you offer, you'd select the best option for the investor.
Q Technicals of a new product.
It can be a blessing if you know the answer, will give strength to your case, contrarily it may also lead to raised eyebrows if you don't have the answers. So, whenever a new investment product enters into the market, brush up your knowledge with the whereabouts of the product, even thought it isn't in your basket.
So, the above were some of the tough questions, among many, that your clients may ask. When you face a complicated question, make sure you:
> Clarify the question, so that you understand what the client is trying to ask, before you jump on to a fancy and elaborate response. May be the client doesn't intend to be tough on you, it's just his choice of words that may have worked the other way round.
> Use Examples, Once you know the question isn't a routine simple one, you need to go out of the box to convince the questioner. For this you have to support the basics with examples, facts, figures, data, etc. Examples and numbers work like magic to expose the eminence of the universal truth.
> In case you don't know the answer, don't hoax, tell them you will find out and get back to them.
> Use disclaimers, Most importantly use disclaimers, so that your contention doesn't backfire at you later. When you mention that equity generates superb returns, don't forget to mention the long term clause. Inform clients about the unpredictability, the potential loss that volatility can cause in short term investing.
The bottomline is, clients will be and should be asking you questions, some of them will be tough. So don’t be scared, rather prepare yourself with appropriate answers, which lies in the fundamentals of investing and the product, only the presentation required is different.
