Mr. Sarfaraz Patel.
Zonal Sales Head, NJ Group
Sarfaraz Patel is the Zonal Sales Head for South Gujarat, MP and Maharashtra (ex. Mumbai) with NJ Wealth. With more than 13+ years of experience in the financial services industry, Sarfaraz has proved to be a valuable contributor in shaping successful business in his territories.
ES: How to build a business? How partner can build a business?
Sarfaraz: Building a business requires the good focus and planning along with implementation. Focus should be on assets and products which are in the best interests of the clients and thus in the best interests of the business. Planning will give us the right strategies and plans to implement in order to reach our own business goals. Needless to say, with right focus & planning, our business goals become more feasible and easy to achieve.
So what should be our focus? There is one word that every one should agree with – SIP.
SIP in equity MF schemes is the best and the ideal way to build your business. Growth in SIP will be directly proportional to the growth of your business. Let us take an eg., where fresh SIP of Rs.1 Lakh is targeted every month by one sales person, for the next 3 years only. With this, the AUM at third year end will be Rs.7.53 crores and at end of fifth year end it will be Rs.9.45 Crores through SIP only by assuming a standard growth of 12%. If fresh SIP inflow is continued every month for next 5 years, the AUM will easily cross Rs.22.45 Crores. You can now use your own maths and multiply the above figures for your setup and team.
Ideally majority of our AUM should be contributed through SIP, say about 60-70%. Not only are the SIP returns usually higher than lumpsum returns (clients are happier!) they are also more sticky in nature. AUM created with retail SIP contribution is perhaps the best assets. They are like assured long term sustainable business for you and can keep you going even in the worst of the market situations. They are your best weapons to have in any market scenario, including the current market scenario.
ES: Why SIP is important for an investor and explain the features of SIP.
Sarfaraz: I think we all are pretty convinced as to why the SIP route is clearly beneficial to the clients. Just to recap, there is power of compounding, rupee cost averaging, automatic timing of markets and so on. It is also universal in nature, affordable and suited to almost every kind of family. As an advisor, it is also easy to promote and convince, especially with today's rising awareness.
However, I would like to highlight one aspect of SIP which we all should aim to achieve. As advisors, we ought to understand and define financial goals for our clients. This is a very basic and fundamental thing to do, something which is at the heart of ensuring financial well-being and success for your clients. In absence of any financial goals, there is no direction and purpose for investing and this is very harmful for both the client as well as your business. With no purpose being attached to the money, the same is likely to be considered available for any and every need or desire that may arise in the client's life, including things like buying a mobile every year !! Your assets are at greater risk then.
Adopting the goal planning approach for your clients for advice opens up new insights and a sense of acceptance of reality on behalf of the clients. Clients are very likely to understand the maths behind the numbers and thus fully appreciate their present situation and the need to fill the gap with investments if they ought to achieve their financial goals. They do get it clearly.
Needless to say, as we often see, the SIP gap numbers are huge for most clients once their financial goals properly are identified. Traditionally if a client would have been ready to do an SIP of say Rs.10,000, post a financial planning exercise, it won't be surprising that the client ends up doing an SIP or at least Rs.25,000. Thats' the difference of realisation and acceptance of financial goals. Again, needless to say, this money is much more sticky and long term than any other assets you accumulate.
ES: Which are the tools that partner can use for SIP Planning?
Sarfaraz: At NJ we have provided multiple tools at our Partner's disposal for use for SIP and goal planning. In brief, there are the tools we have:
1. NJ Financial Tools Mobile App: Has simple goal planning and SIP planning tools which you can use on the go and even share readily with your clients. There are also reports that give historical lumpsum and SIP returns of MF schemes. Within the financial goals, please note that we have the Retirement Planner as well, a topic which we will talk about in detail later.
2. Partner Desk > Family Needs Modules:
(a) > Client Services > Client Management > Family Needs Master: This is the master for adding /editing your client financial goals, or “Family Needs”. You can also manage mapping of your client's existing investments /portfolio, ie., MF schemes and PMS /MARS portfolios, to the goals.
(b) > Client Services > Client Management > Family Needs Progress Report: This is the progress report updated on a daily basis and which gives you the figures of gap and SIP / Lumpsum figures required to fill the gap.
To make things simple, a Partner can make use of the NJ Financial Tools mobile app for calculating the target amounts while entering goals in the Family Needs Master.
Our NJ Branch Sales support team shall be happy to guide you on making best use of the above tools available to you.
ES: Why should we focus on 'Retirement Planning'? Why is it important?
Sarfaraz: In India, there is virtually no social security apparatus worth talking about. When it comes to retired life, we are left completely on our own, except may be for the very few to retire form government jobs.
Here are a few insights which will surely drive my point clearly:
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Two out of three Indians do not save regularly for retirement: This is as per a recent HSBC survey which found that the lack of saving is likely linked to low knowledge of how much money is needed in retirement, as well as many prioritising their immediate financial situation over planning for their older years
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The longevity / life expectancy is steady rising and those who are in their 30s / 40s can be easily expected to live nearly 90 years, given many factors. Living over 30-40 years of retired life is a big reality we need to worry about.
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One study found that having children makes less impact to people’s feelings of retirement security and well-being in India compared with other countries.
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Parents in India are actually “more likely” than those without children to see retirement as a time of financial hardship.
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In India due to financial insecurity, most people want to live with their children in retirement.
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Household financial plans in India contain significant gaps and over one third of those in their fifties do not have retirement savings in their financial plan.
Clearly, retirement planning is a goal which is likely to be most compromised in favour of other goals like buying home, education and marriage for children. It is not surprising that most would have not really planned for retirement even though some sort of planning would have already begun for other goals in life. After a life of hard work and living for others, we all deserve a life of dignity, self respect, independence and peace. The emotional aspect of a happy retired life cannot be truly measured in monetary terms.
Thus, retirement planning seems to be one goal with sizeable gap which needs to be targeted. The retirement planning is likely to yield the highest SIP requirement and also perhaps the longest investment horizon for young adults among all financial goals. But the real motivation for doing retirement planning has to be the fact that retirement is something we must all, including us, be concerned about. Time is of real essence here and given the big challenge ahead of everyone, something that requires action on a mission level.
ES: How do we go about retirement planning for clients?
Sarfaraz: Retirement planning, or for that matter any goal planning, becomes almost impossible to regularly track and manage in absence of a strong system /technology. The real challenge is to consolidate client investments, map them to goals and keep regular tracking of same for many years in future. Fortunately, NJ has the adequate support system for clients to do this every easily using the NJ Family Needs modules. Here is how you can go about planning for same, explained in brief.
The amount of Target / Retirement Kitty required can be easily found out from our NJ Financial Tools mobile App. Once the same is known, you can go the Family Needs Master in Partner Desk and add the Family Need for your selected Group.
After this is done, you can choose to map your existing investments against this need. You can map any MF schemes against this goal or map % allocation of MARS or PMS portfolios to this need.
After the mapping is done, you will be able to see the GAP and the additional investment required for SIP / Lumpsum to fill the gap.
Finally, after discussions with your client, you can make additional investments and map the same to the need and then monitor updated progress on regular basis.
ES: What kind of support can I expect from NJ for this Retirement planning exercise?
Sarfaraz: At NJ, we have a centralised BIU team which is playing an active part in designing & running targeted campaigns on clients for multiple objectives. This team has committed its' active support and will run a proper campaign for Retirement planning which we will soon communicate. We will have properly designed, customised marketing content directed for our client and which shall run by the said team as part of the campaign.
But before we come to the campaign, let us seize this opportunity and attempt to enter the maximum number of Retirement plans in our system. Our objective should be to do this exercise with every eligible client of ours and enter into system so that we have a large numbers to target at. Let us make this a mission, our focus and short term plan for giving a significant boost to our business.