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.
24 x 7 connectivity and continuous news flow is a reality all of us are living in. And if you notice carefully, most of the news flow is all negative. There is always something wrong happening around us, in our city, in our country or in the world. Negative things only make sensational news and that's what sells. Not only does it affect our emotions and thoughts as advisors, it also affects the way our investors think and behave.
Media industry is in the business of creating sensationalism as that's what increases their TRPs. They are least bothered about reporting facts and are busy in propagating what sells more by showing the same news over and over with pointless high decibel debates. Social Media has taken this problem to another level with fake news being spread at the speed of light and individuals getting sucked into this whirlpool of posting and forwarding messages without checking it's authenticity.
So, what were the hot media issues in last 6 months. In Aug 19, it was all about scrapping Article 370, day and night we were excited with the nationalist fervour about Kashmir. Then, suddenly Kashmir was out of news and came the story of declining Auto Sales in India. Large hue and cry was made about falling car sales with national level debates on various news channels and numerous articles in print. From Cars we moved on to increasing onion prices, there were memes of onions all around.
While News channels were selling onions for 250/kg, onions were available at 120/kg only if you went to your nearest sabziwala!! From onions, next news was CAA/NRC, followed by US attack on Iran (and the whole world was worried that oil prices will rise) and now to the current 'the world is coming to an end' because of Corona Virus.
How many of us are aware of or interested in the situation in Kashmir now? Or do you think the auto recession is over?? None of us are concerned about Iran or oil prices anymore. Well, by the time you read this, many of you might have forgotten the Virus as the new topic of discussion will be Budget 2020 and change in income tax slabs with all kinds of experts dishing out their views all the time on TV and social media!! If there is no sensationalism, news channels will be out of business.
In reality, hardly few of us would have visited or are planning to visit Kashmir, leave alone Iran. And about auto crisis, majority of us were any which way not planning to buy a car this year. Do you remember any thing from Budget last year or the year before that? But listening about these things all the time affects the way we work. Actually, in our day to day life, things are much smoother. You can't do anything about whatever is happening world wide.
If we talk from the perspective of stock markets, these news flows obviously has an impact on share prices in the short run which makes investors jittery. But in the long term, share prices are only slaves of earnings. While in the last 20 years, earnings of Sensex companies (EPS) has grown by 10%, Sensex has grown by 11% having an almost 90% correlation. While if you look back, in the last 20 years, everything which could go wrong with the world or India has actually gone wrong. There have been multiple wars, terrorist attacks, Oil has oscillated between $30-$140, Elections have come and gone, governments/politicians have come and gone, we have had corruption scandals, Trump election, Brexit, Lehmann crisis etc etc etc. The list probably is endless.
An SIP of Rs. 10,000 in an Equity Mutual Fund started 20 years back is worth Rs. 1.73 Crore now and Rs. 1 Lac invested in an Equity MF is valued at close to Rs. 15 Lac now despite all the negative news and negative events in the world. Even if you had done SIP in the worst performing scheme, you would have still got 10.4% return in last 20 years and the value of your investment will be Rs. 76 Lac (for Rs. 10,000 SIP per month).
It is hilarious that some people in media have the job of explaining the reason for daily rise and fall of markets and they blame/credit it on anything available. So some day when market falls it might be due to poor GDP growth of US, Bad election result in India or high inflation numbers, conversely a rise in the market will be attributed to forecast of good monsoon by MET in India, Oil price falling by $2 or even by exit poll results!!
What should you do as an advisor in such a scenario?
That is the million dollar question. As an advisor, you need to steer clear of this bad news and focus on your job of guiding investors. You cannot afford to behave as your investors do, then there will be no difference between the investor and yourself.
You should try to have a disciplined approach for doing the things below:
1. Prospecting – Meeting minimum 5 New investors every week, 1 per day
2. Focus on Client Goal Planning and reviewing their portfolios in a fixed frequency
3. Continuously keep doing activities for educating clients both new and old
4. Add new products you can offer to your clients
5. Keep Upgrading your skills through constant learning by attending related courses/trainings
Focus on these tasks and stay away from negativity. There is also no point in discussing these news flow with your clients. It is always better to maintain a diplomatic stance with the investors by staying away from contentious topics related to politics or religion for example. Your discussions with the clients at all points should be with respect to his goals and his financial plan as that is the most important thing for him and that's why you are there for him and not to discuss current affairs.
Even when with colleagues, refrain from discussing negative topics and walk away. Try to have News detox. Don't check news on your mobile and stay away from social media for a couple of days and you will be surprised to see that you were actually able to work with much more focus and didn't miss anything substantial. To start with, switch off all notifications on your mobile phone which keep distracting you throughout the day.
There are always going to be problems in India and the world. Some times it's elections, Budget, govt policies, war, etc., and media is going to blow these things out of proportion. Probably the scale and size of that is only going to increase in future. We need to follow detox from news and negativity at our end and remain focussed on our work of wealth creation of our customers.