Let me make it very clear that I am trying to address RETIREE’s money and not the retirement planning for youngsters. India is a highly populated country, by default we get huge data.
For example, according to Population Census 2011, there are nearly 10.4 Crore elderly persons (aged 60 years or above) in India; 5.3 Crore females and 5.1 Crore males.
A report released by the United Nations Population Fund and HelpAge India suggests that the number of elderly persons is expected to grow to 17.3 Crore by 2026.
If you are a financial advisor and looking to serve this population, naturally these numbers should definitely excite you. However, let me play devil’s advocate here. The very first question should cross your mind, am I well equipped to handle such clients?
I will touch the commercial angle later. First the non-commercial aspect. Let’s address them one by one.
Your age matters a lot. For example, if your age is 50 and want to manage a 70 – year old’s money for the next 25-30 years i.e. till his/her age of 95-100. Yes, 95-100 years will be a reality soon. Revise your number from 80 to 100 years while doing retirement planning. It means when the client turns 100 you would be 80 because your age will also increase with time.
As most of the MFD’s businesses are individually driven, will you be able to serve them beyond a point? Even if one wants to, will that MFD be physically fit enough to manage the client’s money till his/her last breath?
Many of these retirees who have a decent corpus to invest stay alone i.e. away from their kids. Loneliness is the biggest problem with them. They may want your time more than the returns from the investments.
I know a few retirees who are in 70s/80s and keep FDs with banks only to have some excuse to talk to people. They may call once a week to discuss one issue at a time as with the age comes forgetfulness. Also, the topic of discussion may not be very encouraging.
Not to forget there will be a generation gap. If you are looking at tapping this market do you have the patience to take such calls and do you have that much of bandwidth?
Assuming that you have all the patience in the world and can deal with 50 such retirees, is it commercially viable to manage the relationship making them a primary source of income? Let’s do the math.
An average book size of 50 lakhs with 100 people takes the AUM to 50 Crores.
The probability of this AUM growing to 100 Cr is almost impossible. In fact, it may deplete further as they may need regular income from the investments for periodic needs like medical expenses, grand son’s/daughter’s wedding, etc. Even if we assume gross 50 bps revenue from this AUM it would be 25 lakhs or even less and if the AMCs are forced to reduce expenses it will only go down.
My submission is, undoubtedly the market size in terms of a number of people is very big and likely to get only bigger. However, you may need different skill sets to handle these people.
Let’s look at the problem area first which is more emotional than logical. Many of these retirees are lonely and they need someone to talk.
If you are looking at reaching out to this segment, one solution which comes to my mind and which may be commercially viable also.
Create a group of 8-10 such retirees, let them spend time together. Have a monthly meeting with them, ask them to share ideas, stories, books, etc. with each other. If you are able to acquire 50 such clients, you may run 5-6 such groups, having more than 10 people in a group may create chaos.
Also, you can run an annual tournament of Bridge, Sudoku, Carrom, etc. All this can be done without getting involved personally by putting an enthusiast resource. Let them showcase their talent to each other.
By doing this, you will not only have happy customers but at the personal front also get a lot of learning experience. Remember, the financial advisor’s job doesn’t end with managing money but managing emotions and creating happy experiences are of paramount importance.
Cover Image Source: Dear Alliance Org.