CB Bhave spoke to HT and had interesting insights about Indian financial advisors. Read it here. Some excerpts:
Q: ….that investors are not used to paying for advice. Even though 60% of our GDP comes from services, we are averse to paying service tax or service charge. This habit of not paying is more a behavioural aspect of consumers. How do you see this playing out in no-loads?
CBB: This is not an issue that has arisen only in this area. This is a transition we have to make. Initially, when there was talk of privatisation of electricity distribution, many investors who were thinking of investing in power plants or distribution were not clear as to what will people be ready to pay for continuous power without fluctuating voltage.
I have no doubt in my mind that consumers understand what they want. It is for the entity that sells the service to convince the consumer that the charge is worth it. The important point in this transition is that it empowers the investor that he can make a choice now.
Equally, if you as a distributor want the same customer to come to you again, you get into a relationship business rather than a transaction business. When your commission is assured, you are in a transaction business.
How many of you are ready/comfortable in making the transition and start paying for advice and not get swayed by commission based recommendations?
To my mind, the bigger issue is finding the right advisor who is both knowledgeable and professional. It’s not that there are no such advisors. They are everywhere but their business is limited to servicing maximum 1000 (my guestimate) clients. Scaling up is a big challenge.
But what if good, ethical/professional advisors standardize their processes and train a few thousand people to take their methods forward?
I think it’s do-able and also the need of the hour. What about you?
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