Do you know how will your business look like in the future? How much are you going to earn in the near term and few years down the line?

The idea behind assessing your future income is, it gives you a perspective of your future, how much are going to earn in the future and and how much more do you need to make, to live a comfortable life until your last breath.

For a salaried individual, calculating the expected future income is pretty easy, one can simply extrapolate his/her current salary by an average annual growth rate, taking into account a bonus raise during promotions and job switch. But for a businessman estimating the future income is tricky. Your income will not grow in a straight line over the years. This inconsistency in income is because you don't get a fixed profit every month, your income pattern largely depends on your capability and the efforts you put into your business.

For a financial advisor, estimating the future AUM is a hard equation to solve, since the AUM is market linked, but future sales are largely predictable. You can aim and plan for new clients, retain existing clients, new SIPs, etc. Your future growth is pretty much in your own hands, what you earn depends on how much do you want to earn.

Having said that, to forecast your future income, the first and the most important thing to do is to have a clear vision. Meaning, visualize that how do you want your business to look like in the next five years, ten years and ahead. And pen your vision down, in terms of the AUM or the number of clients, etc., that you want to achieve, over the years.

Once you have visualized how big you want to become, the next thing to do is break down your vision into goals.

Macro Level Planning: Break your vision into broad long term goals. Set your long term targets like the total sales and the Equity sales you want to achieve, the number of E-Wealth accounts, the number of clients you want to acquire, the number of SIP's, MARS sales, PMS sales, etc., you want to do, in the next 5 years, 10 years, 2 years, or 1 year.

Micro Level Planning: Once you are through with the broad goal setting, the next step is micro level planning. As the name suggests, this is the stage where you are going to dissect your macro goals into parts. Meaning the step by step process about how are you going to achieve your macro goals. So, if it is about SIP sales, how are you going to achieve that target of Rs 20 Lakh of new SIP book in the next 2 years. So, the micro target could be getting 8 new SIPs of Rs 10,000 each month, you can do this by identifying the people from your existing client base who need and can do new SIPs, or targeting new investors. Your micro level goals will serve as the detailed plan of action you must follow to achieve your macro goals and your vision.

Review: Lastly, and most importantly, the above exercise becomes futile if you do not monitor the progress of your goals. You must always be in touch with your macro and micro goals, be aware of your progress compared to the targets set, analyze the factors behind the disparity, if any, and take steps to be in alignment.

NJ's Partner Planning Utility is a tool available on your Partner Desk, which can aid you in the entire Goal setting and Review process. You can enter your macro and micro goals, there is provision for assigning micro goals client wise also, and you can easily monitor your progress both in percentage as well as in absolute terms. The tool can prove to be useful in your goal management and overall business development.

Apart from goal management, there is a lot more that you can do to grow and actualize your vision, like working on client satisfaction, improving service standards, constantly upgrading your knowledge, ensuring minimum client attrition, keeping an eye on opportunities and not letting them go, employee satisfaction etc., thereby ensuring your business' and personal growth.

So, if you want to know how much you are going to earn in the future, define that number, and work towards it!

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The Indian equity markets witnessed a lot of commotion lately. Both major Indian indices, the Sensex and Nifty are being erratic, sliding downwards for the past few weeks. The Sensex was trading at just below 39,000 at the beginning of September, after a month it's down more than 4,000 points, trading at less than 35,000.

Naturally, investors are worried because their investments are falling in value. Their anxiety is further augmented by a negative sentiment around, triggered by media reports and opinions of family, friends, neighbours, colleagues, and possibly everybody in the vicinity as falling markets is the hot topic currently.

So, amidst their shrinking investments and societal pressure, how do you explain to the poor investor, that there is absolutely no reason to be worried about, things are going perfectly as per the financial plan.

And this is not uncommon that you are encountering terrified investors, over your career everytime there is volatility, there is media and peer pressure, the investors are worried, they want to redeem their investments to cut further losses, they might even blame you for their loss.

With markets slumping, this scenario is a test of time for you as a financial advisor. One of the most crucial roles of an advisor is handholding the client in turbulent times. So this piece concentrates on how you can pacify your clients and not let them take a decision out of fear of loosing money.

1. Volatility doesn't mean Loss. One thing that you need to make your investor understand is, volatility doesn't translate into losses unless he sells his investment at a low price. The risk arising out of volatility in prices, is limited to the time being, the risk subsides as the investment period increases to long term. Say for instance, the investor invested in a fund when the NAV was Rs 100, after the upsurge it went upto Rs 140, post the market crash it went down to Rs. 90, so you must convey to the investor that this fall in NAV is not a permanent phenomenon, it can upto Rs 100 or Rs 120 in the coming days, and there is also a possibility that it can do down further to Rs 80 or Rs 70. Sentiment and external factors can influence the NAV, but temporarily, over the long term, the NAV will grow because of the underlying companies' potential.

2. Data: Statements won't work until you back them up with numbers. So, have your historical facts and charts handy, show to the terrified investors the historical numbers of global equity, Indian Equity history, and explain to them that it's not the first time markets are volatile, they have always been this way. Highlight the times when markets were going bonkers, there have been periods worse than this, there were wars, global economic slowdowns, scams, natural disasters, political instability, and all these factors pulled Equities down, but eventually everything fell in the right place. Over long periods of time, equities have overpowered all hurdles to emerge as the most rewarding asset class. Ask them to consider any 10 year period from the birth of Indian Equity, investors belief in their investment didn't go in vain.

3. Volatility is an opportunity to invest. Ask your investors one thing, 'What do you do when there is a 50% discount sale at the mall?' You have to do the same here, volatility presents an opportunity to gain, in the form of low purchase prices. You are getting many quality stocks in your Mutual Fund at a lower NAV, which will boost your profit margin from the investment over the long term.

4. They invested for their goals which are still far away: Remind the investors who are considering

disposing their investments to avoid further losses, about their goals, which is why they invested in the fund. Points 1 and 2 above will explain that NAV fluctuations are temporary, and bringing their attention to their goals will support the need to refrain from taking a decision hastily.

5. Prepare the investor for volatility shocks. The first thing to do when you have a client onboard is acquaint him/her with the risks associated due to volatility, which is nothing but a summary of the points above. This activity will mentally prepare them for such days, in most cases the investor won't panic because he sort of expected the downturn. And showing the flip side also exhibits your credibility, since you are not presenting only the rosy picture to the investor, rather you are being ethical and helping the investor take an informed decision after counting in all the risks.

For an investor, ignoring the noise is easier said than done, because the idea of losing money is frightening, accompanied with negative statements being bombarded from all sides can make him lose his mind. It is your responsibility as his advisor to calm the panic stricken investor, explain the reasons, show the way forward and and ask him to stick to his financial plan.

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Role Playing has been proven as a successful sales conversion strategy globally. Looking at the impact role plays have created, growth witnessed by organizations as a result of sales conversions by being prepared for the unanticipated, role plays are largely penetrated in businesses today, many organizations have incorporated role plays in their sales trainings. Role Plays are also a part of curriculum in colleges, many MBA colleges have role play sessions for their students, preparing them better for the rustic outside world.

The potency of role plays to add value extends to our advisory practice as well. We can augment our sales and expand our business by incorporating Role Playing in our system. The ideology behind role plays bank upon the concept of being prepared for all probabilities.

Role Play is a technique wherein a situation is fictionalized and the participants assume the role of a different person than themselves. So, you can do a role play with your family members or friends or your employees, in which one becomes an investor and another advisor.

How does Role Playing help?

1. Role Playing helps you give a perspective of the client's thought process. Role Playing is based upon the doctrine of substitution. When you assume the role of an investor, you step into the investor's shoes and think from his mind. You understand his needs in a better manner and can predict how he/she would react in a particular situation or to a particular stimulation.

2. Helps you be prepared.Role Plays prepare you for the most unlooked for reactions from investors. Situations aren't left to chance, you are mentally prepared to handle most difficult situations because you have practiced them before. When you face the client, you are more calm, the role playing works like a déja vu, you know what's coming next, and you are equipped with the best possible comeback.

In advisory, client centric approach is the key to business development. But often, we miss to bring out the client element when we talk to the investor. We talk about our product, our services, rather why the investor needs them, what purpose will they solve, how will the investor benefit by investing with us. We are so consumed with our offerings, that we miss to connect them with the investor's needs. Role plays is one of the most effective ways which can help us connect the dots, because of the above two points, you understand the client's perspective and you are prepared.

3. Engaging Process. Role playing apart from being an effective tool to boost sales conversions, is also a very engaging process. There is activity, involvement, it's fun for employees and helps boost their confidence. It helps participants imagine and come up with new ideas. Though role plays are entertaining, yet they must be taken seriously. The role play should be treated as a real customer interaction experience, and not a theoretical speech.

4. Role Plays help identify and work on the weak points.A role play is like a premiere before the real show. It gives you leverage to identify any mistakes that you are likely to commit and avoid them in real time.

To extract the best from a role play, you can do the following:

> Let the sales people play different roles each time, one person should not be playing as the investor always.

> Evaluate the role play. It'll be meaningless if you do not evaluate the role play and give relevant feedback. It could be body language, what went wrong, what went right, how could he/she have done better, etc.

> Let the employees watch each others' performances, and share their observations.

> Do a role play of past failures, prospective clients you could not convert. A role play would allow you to diagnose the loopholes and come up with alternate ways to tackle similar situations in the future.

When multiple minds are at work, you might come across situations which even you haven't encountered before, so it gives you an opportunity to be prepared for the unforeseen. A role play is is a more practical way to learning rather than learning through PPTs or through a teacher student mode. Just like a coach can explain rules of the game to the players, but the player will perform well only if he practices before the real match. Practice familiarizes him with the game, the hiccups that may come, the rules and how to apply the rules in real time, and helps him control his emotions. Similarly, role plays are like practice matches for financial advisors, it gives them a taste of the match before the real match takes place.

Role playing is an overlooked but a very effective strategy for better conversations with investors, you must practice yourself as well as train your employees via role plays to increase sales conversions.

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HNIs or high net worth individuals is a class of individuals who are distinguished from other retail segment based on their net wealth, assets and investible surplus. This is a very lucrative segment for financial advisors and there are many who have aligned their business model to suit the HNI client segment. However, as desired as the HNIs are, they are also peculiar in their characteristics and approach to managing finances.

HNI clients are also not easy to acquire. It would be also safe to say that almost all Ultra HNIs are clients of big wealth management firms and family offices. Fortunately, the size of the HNI market has been increasing very fast and today it is more spread-out and approachable for advisors. Today it is very much possible for small & mid-sized financial advisors to focus on and acquire HNI clients, in addition to their retail client base. In this article, we look at this HNI segment more closely and try to identify common profiles, characteristics, needs, problems and common solutions for the benefit of our readers.

Please note that this is a generalized piece meant for familiarizing you with a typical HNI client. It may be very much possible that your experience may differ with us but then, it will only help you get more clarity on the image of an average HNI in mainstream discussions.

Definition:
There is no standard definition of a High Networth Individual in India and the definition of HNIs varies with the geographical area as well as financial markets and institutions. Generally, the following definitions are the most common...

• Ultra HNI: Above Rs.25 crores of investible surplus
• HNI: Rs.2 crores of investible surplus
• Emerging HNI: Rs.25 lakhs to Rs.2 crores of investible surplus

Profiling:

• The Inheritor: Inheritors are born in rich families, having established businesses & social network with easy access to capital and then going on to inherit business /wealth.
• The Self Made: First generation entrepreneurs who have strived and build businesses and have created wealth through success.
• The Professional: Highly qualified, skilled professionals who have created wealth as they have reached leadership /top management positions in their companies which have grew big or have got big reputation and success as professionals in their field.

Depending on the nature /source of their wealth, the HNIs generally also differ in many other attributes regarding how they perceive and manage wealth. The wealth dynamics of each type of investor is unique. It would be interesting to decode their mindset on different parameters...

Characteristics & Trends of HNIs today:

• The number of HNIs & Ultra HNIs is rising at a fast pace (estimates range from over 17% to 22% annually)
• The age of HNIs falling with growth of the digital age & emergence of E-Commerce
• HNI segment today is heterogeneous; meaning HNIs are increasingly from all social backgrounds, unlike before
• Most HNIs are distinguished individuals in social networks of power and influence
• HNIs today are more outgoing, showcasing wealth and experimenting
• HNIs are more today more spread across Tier 2 & Tier 3 cities and not concentrated to metros
• HNIs are increasingly heavy spenders on high quality homes, luxuries, travel, entertainment and education
• HNIs have investments majorly into their own businesses and realty
• Growing companies and industries are putting many employees into the HNIs segments

Major objectives of HNIs:
While most of needs of HNIs are pretty obvious, the difference lies in the way they approach each area of finance its' background complexity. Typically HNIs are likely to be more aware of financial markets and products. They are also more like to have higher risks taking ability and willingness. Their financial background would also be likely to be deeper and more complex.

The following are the broad scope of needs of HNIs....

• Investments & wealth management: HNIs are looking primarily for
• Wealth accumulation
• Wealth preservation
• Liquidity
• Holistic view of personal wealth & business wealth
• Protection of wealth: HNIs are primarily looking for protection solutions to safeguard their wealth and assets against liabilities and business risks.
• Credit management: Here HNIs are mainly concerned about leveraging investments and managing liquidity with credit across personal space and business space (working capital, term loans, promoter funding, etc.)
• Inheritance planning: Here the primary objective is of smooth transfer of wealth to next generation in a tax efficient manner with appropriate legal structures.
• Tax planning: HNIs consider this as inherent part of any financial decision where they primarily look at post tax returns and tax deductibility.
• Charity and supporting social cause: Increasing more HNIs are also willing to support social cause like wild life, nature and education.

Common wealth management issues of HNIs:

• Wealth concentration on own business and no diversification
• Less consolidation /scattered investments with difficulty in tracking performance
• Personal assets likely to be provided as security to liabilities
• Too much complexity in holdings and investments
• No clear financial goals /objectives from investments
• Internal family dynamics affecting decision making
• Locked up investments in illiquid avenues

Common wealth management solutions for HNIs:

• Investments
  • Segregation of business and personal wealth
  • Consolidation of all assets & liabilities – business & personal
  • Identification of wealth goals /objectives
  • Diversification across asset classes /products
  • Monetisation of business wealth
  • Unlocking of illiquid wealth
• Protection
  • Ring fence personal wealth from business liabilities
  • Plan for financial independence of family members
  • Take insurance for assets and business /professional liabilities
  • Look at insuring life, health for all family members
• Inheritance
  • Write proper Wills for family members
  • Create structures like Trust for smooth transfer of wealth & assets

Challenges in acquiring HNI clients

• Not easy to get leads, references and appointments
• More relationship driven and have to like you first to do business
• Winning trust & confidence is a time taking process
• Competition from Family Offices, financial institutions
• Want single window solutions for all needs
• Expect good reputation, qualifications, infrastructure and high service standards

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