Last week we have read an article titled “HOW TO COMPETE WITH MANUFACTURERS ON THEIR OWN PRODUCT? Part – 1″
I would like to elaborate on the topic as part – 2 and show if IFA thinks, then nothing is impossible. You just have to think out of the box. If you really want a solution then read till the last line and think over it.
The future of the investment management industry is online and you will render yourself obsolete if you don’t figure out how to add value beyond just overseeing portfolios
“The companies and advisors who learn to leverage technology will enjoy a competitive advantage over the market for years to come.”
Advisors are thinking by providing well-designed reports, websites, mobile apps they became tech-savvy. Some of them thinking if they provide an online Investment facility they will win the race but in the coming days, they have to fight with Two Big Rivals one is RoboAdvisory and another is Direct Plans both are cheaper than normal advisors by a huge margin.
When the same thing is available in cheaper prices why should investors be willing to pay the fees? You can’t just ignore this.
Often counter-argument on this is said that robots can not give a human touch. I would like to correct that new AI technology is developed that will fill the gap between robots and Human Advisor.
Just ask your investor who wants to shift from regular plan to direct plans “Why they are willing to shift in Direct Plans?”
JUST PUT YOURSELF IN THE INVESTOR’S PLACE AND ANSWER HONESTLY.
Ans will be the same among all the investors that
” We are getting higher returns than regular plans.
SIPs & STPs are also available in Direct Plans what we are doing nowadays with Regular Plans, then why we should pay for the same.”
To compete with both you will have to prepare for either
- Your services should be cheaper in terms of cost. OR
- It should be value-added.
If you are capable to generate higher returns than Direct Plans or ready to offer cheaper fees than Robo-Advisors then the investor will be happy to pay for the services that you are rendering.
The Big Question is “So what should be done to sustain in the field?”
First of all, you should become Active Advisors instead of being Passive Advisors.
What I mean to say is to use your own knowledge and actively manage an investor’s portfolio Instead of suggesting automatic transactions.
You will gain double benefits first is by managing the portfolio actively, returns will be increased and the safety of the portfolio will also be improved. The second is that investors will not get that in Direct Plans at all.
Once you gain higher returns than SIP/ STP in direct plans people will not think to go anywhere and will be ready to pay you your fees.
This is the only way to beat Direct Plans as well as Roboadvisory.
Sooner or later Advisors will have to accept the reality then why not now?
जब जागे तब सबेरा
Don’t think that I am telling a fairy tale, nothing is impossible.
See what I have done. How I am using my own Investment strategy for my investors.
You can see the huge difference in and returns 44.99L against 33.84L in terms of abs returns and 21.3% against 18.61% in terms of Compounded annualised (XIRR). What the investor will be generating higher returns by investing in Direct Plans is just 0.5 to 1% only but we have generated 2.7% more returns which is outperforming the investor’s so called Higher Returns.
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One thought on “HOW TO COMPETE WITH DIRECT PLANS?”
Very good feedback and guidance.I agree with your views.
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