There are two ways of getting references. (1) Ask for it from your existing clients. Some will give, some may not. Keep asking. (2) When existing clients are happy with your service and advice, they will refer clients on their own. So, keep your clients happy.

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Initially, most IFAs target people from their natural market (friends, relatives,etc.). However, I have not seen much success in this strategy. It can just be a starting point. Eventually, you have to move out of natural markets to get good and long lasting clients.

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In retail you should target around 200 active clients (who give regular business). If you have HNI clients, 50-75 clients will be good enough. Remember, there is a difference between active clients and inactive clients.

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There are primarily two steps to make new clients. (1) have a list of prospects (2) meet the prospects. So, the important thing is to identify more and more prospects and try to meet them. There is no other rule. In the first few years, your target should be to meet atleast 10-20 new prospects every month.

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While all clients who are not HNI clients can qualify as retail clients, there should be some minimum criteria. A retail client can be defined as someone who

• Does a minimum SIP of Rs.5,000/- pm. (as a family) or
• Invests a minimum of Rs.1 lac a year or has an investment portfolio of minimum 5 lacs or
• Gives you a minimum annual commission of Rs.2,000/- per year

Don’t underestimate the power of retail client. If you have 200 such clients, many of them will become big over time and one day you will become a top IFA in the country.

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There is no fixed rule. However, HNI can be someone who can do SIP of Rs.1 Lac pm. or invest lumpsum of 10 lacs at a time or have an investment portfolio of over 1 crore or gives you an annual comission income of over Rs.50,000/-. Initially, while the client may be HNI but he may start small with you. In such cases, you may not classify him as HNI client but should give extra care and attention to make him grow.

2

Simply put, a client can be defined as someone who invests regularly (atleast once a year) whereas a customer is irregular. A SIP investor can be qualified as a client since investment is coming regularly. This business is about clients, not customers. If a customer invested once long back and there is no regular business and income, there is no point considering that customer as a client. It won’t help in growing business. Many IFAs boast of having a big list of clients. Infact, what they have is customers, not clients. Have clients, not customers.

2

No. You should have a diversified client base. It will give safety to your business. Ideally, your top client should be less than 10-15% of your total business. Your top 5 clients should contribute less than 25-30% of your business and your top 10 clients should contribute less than 40-50% of your total business. This is because if you lose a top client, you lose big time. So, your aum should be spread between more number of clients. You should aim at diversified client base.

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Getting a reference without asking is the best thing to happen in this business. You should expect to convert 80-100% of such references into your clients.

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There is a difference between asking for a reference and getting a reference on its own. If you ask for references and get it, you should expect to convert 1 out of 2 two such  references. That’s a success ratio of 50%. If the client gives you a references on their own, your success ratio would be much higher.

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The general rule is that if you meet three new prospect, you can expect one to become your client. Most IFAs in the country have this ratio of conversion. So, for each 100 prospects you meet, you should be able to convert 30-35 as clients. After a few years when you develop more expertise, your conversion ratio could be higher.

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Once you have 40-50 clients, you should mostly focus on rerference from existing clients. It works best. You can also do investor awareness programs.

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If you have loyal clients, you can expect them to stay with you for very long. Loyalty is reciprocal. If you become loyal to your clients, they will become loyal to you. Few clients will leave you anyways. Don’t worry about this. As far as your advice is pure, you practice integrity, provide great service, you can expect to retain clients for long term.

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No. Location of clients should not be far from your work place. This is because it would kill a lot of your time in meeting them. You should aim at a commute time of less than 30 mins for going to client’s place. Few exceptions are allowed. If you are tech savvy and most of your clients are comfortable with skype or video calls, then it doesn’t matter which place your client lives.

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You need to make few clients on your own in the beginnng. After that most clients should be added through reference and Investor Awareness Programs. Over 5-10 years, 75-80% of your clients should be through reference. The higher the number of referred clients, the better. This is powerful, effective and long lasting.

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Bigger the client, better. However, it depends on your business model, city in which you work, your social circle and your past experience. Everyone wishes to have big clients. However, all big clients were small one day. You need to nurture a client over years and only then you can reap the rewards. If you start with small clients, you should be prepared that it will take time for your business to grow big. If the client has potential to grow, you should take him on board.

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If you have 50-75 loyal clients, you should expect to do well in this business. How it works is that some of the loyal clients will grow big over 10-15 years. Many of these clients will remain with you and give you big business. This is how most IFAs have grown big in the last decade. A loyal client is one who deals only with you, respects you and your time, ask competitors to connect with you first, not bothered with ‘Direct’ and gives you references. You should be very strict in qualifying a loyal client.

2

It’s simple; loyalty is reciprocal. Be loyal to your clients and most likely your clients will become loyal to you. For this, you need to give them good advice, great service and always place their interest before yours. Don’t expect clients to be loyal. Start with your loyalty towards them. You will get fantastic results.

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A client is someone who may invest regularly with you. However, he may also have other advisors. He may ask for kickbacks. Though he gives you business, he may not respect you and your time. However, a loyal client is one who deals only with you and invests regularly with you. He respects you and your time. They are interested in your growth. They give you reference. Your growth will mostly come from loyal clients. Loyal clients are not very fussy about your commissions and don’t pay attention to noise in the market place. They mostly trust you and value your advice. They are willing to stay with you. Your growth in this profession will depend upon how many loyal clients you have.

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