Mr. Husaini Kanchwala,
Head - Product - Investments. NJ Group
Husaini Kanchwala is the Product Head for Investments, having been a part of sales earlier. With an experience over 15+ years in the financial services industry, Husaini is responsible for investment product promotions and tie-ups with manufacturers.
Yesterday I got my credit card statement. After years or I would say first time ever in last 15 years, my monthly Credit Card bill was zero. It was because I did not travel, didn't do any online shopping, didn't go for any movies, thankfully didn't spend Rs. 500 on pop corn tubs, didn't buy any stuff from my weekend mall trips, no spending on petrol either. None of this, last month.
Even as I look forward, lock down or no lock down, I will probably be happy not doing these things in near future too. Is it true only for me or for most of us? In the lockdown phase, we have been spending money only on “essentials” which is food items, vegetables, fruits, groceries. All the fancy stuff which we had bought, shoes, clothes, watches are lying in the cupboard, unused. We continue to live in a minimalist way cutting down on so many of our so called “lifestyle” expenses. Which actually if you ponder over, are all “non essential”.
Even post lockdown, all of us are not going to rush to buy a new watch or latest gadget. We will probably be happy having dinner at home rather than going to restaurants or malls. No more international trips, for quite some time, for most of the people. For domestic trips also, business trips may be replaced by an online meeting. We will all probably avoid domestic leisure trips too to Goa or Manali till the time things become normal.
How is all of this going to change investor behaviour. With “non essential” expenses down, people are obviously going to save more money and be more concerned about their future. They will think through about their investments, especially now when expenses are reduced and you can potentially save more.
With real risk of a life threatening disease dangling over our heads, people will look forward to increase their Life Insurance coverage, in case anything happens to the bread winner of the family. Or health insurance, in case any one in the family gets affected. My Doctor friend recently shared with me that even with no official line of treatment available, a 14 day stay in hospital for Covid 19 can cost you close to Rs. 5-7 Lac considering ICU cost, PPE cost etc. The mask and protection garment itself costs Rs. 7000+ per day and it's not reusable.
Covid 19 doesn't look at any one's social status or colour or gender or religion before affecting anyone as we have all experienced. From heads of states to humble citizens across the world, anybody could be the victim. Not even sparing the doctors. In fact, you will be surprised to know Doctors in US have started writing their WILL, in case something happens to them. What are their investments, who gets which property, what are their liabilities. And in case both parents are doctors, who gets the custody of the kids, if both parents get affected!!
We buy an umbrella only after getting drenched on a rainy day. Covid 19 is probably that rainy day for investors. It's a wake up call to start saving and investing for many. It's a wake up call to insure yourself and your family against death and disease.
Investors will be on the look out for a good advisor. Some one who can guide them during this time, can hand hold them. Can explain to them and provide solutions to all their dilemmas. With interest rates plunging down, markets being so volatile and so much confusion all around, they will seek comfort talking to an individual, a professional who can give them right advice in these turbulent times and not to any robots or algorithms thrown by Google. They will need personal touch.
They would go by advice of a professional who can guide them in the right manner, in their best interest, not only for wealth creation but also for safeguarding and insuring their family's life and health.
Yes, of course you may argue, many people will lose jobs! There will be salary cuts. All this will force people to stop their SIPs. Yes, incomes are going to be affected and there is going to be stress.
But rather than transferring the full affect of that cut to SIPs first, we need to explain to the investor how can he cut down his other “non essential” expense and treat SIP as an “essential expense”. After all if he cuts SIP now, how will he tend to his future goals! An effort in this direction, will surely yield positive results and save lot of SIP closures, if not all.
Role of Financial advisor is going to become extremely important in times to come. Though this opportunity is open for all, but all advisors may not benefit from it. Only those who continue to reach out to clients and give right advice in best interest of investors will become magnets and attract investors from every where. Advisors/Distributors who are worried about markets themselves and have stopped talking to their investors, face the risk of extinction as their existing investors will also start searching for a better advisor to guide them.
This is a critical juncture in the life and business of all Financial advisors. Use this crisis as an opportunity to strengthen your bonds with the customers. Do Proper Need Analysis of investments and insurance and you will be surprised to find Investors much more open and willing to share all their investment details with you, because they seek right advice.
In the medium to long term, the industry is going to grow, the investments are going to grow, the overall AUMs are going to grow, that is for sure but is your AUM as an advisor going to grow? Well, it depends solely on how you behave and interact with your investors in the current times.
While world may continue to talk about economy, Covid 19 impact, what government is doing, how long will pandemic last, how long will lockdown last, none of these things are in our control. What's in our control is how we reach out to our investors, how we give them comfort and do what's in their best interest. This is a water shed moment in the history of our business, you can either become GREAT or become a Dinosaur, the choice is yours.