2017 Year End Review with your Clients

Another year of shaping people's future, of seeing your clients fulfill their goals, of meeting new people, of answering endless questions, of wise advise, is coming to an end. The time has come for a year end review, when you would sit with your investors, review the performance of their existing investments and plan for the year ahead. This year might not have been tough for your investors as well as you, since the market sentiment has broadly remained positive, the markets have grown from around 26,500 in the beginning of the year and stands at around 33,500 in mid December, around 25% return on an absolute basis. As per the financial advisory protocol, every year end is the time for a comprehensive review of your clients portfolios and financial plans, it is also the time to strengthen your bond with your clients.

So, here is a list of what all you need to do in the upcoming weeks:

Portfolio Review: When you devise and implement a strategy, it becomes extremely important to track its progress by checking for deviations. Year end is a good time to carry out the activity of scanning the investor's portfolio. Basically, Portfolio Review constitutes two elements:

1. Quality: It involves doing a Quality Check or performance evaluation of individual investments in the investors portfolio, so that poor performers can be highlighted and dealt with. Consistent underperformers should be done away with, since they are doing nothing but burdening the entire Portfolio with their losses, and a recent underperformer should be taken notice of, for re-evaluation in the future.

2. Rebalancing: There will be deviations in the investors ideal portfolio throughout the year due to valuation gains and losses. Portfolio Rebalancing should be done at least once a year to restore the Portfolio to the desired allocation.

Major events: A span of 365 days is a package full of foreseen and unforeseen happenings, and many of these happenings have a significant impact on the investor's life and must be accounted for, financially as well. For Example, in the last year your client was a father of a two year old girl, this year he is a father to two daughters. So, the entry of the new child must be recorded in his finance books also. The investor's insurance policies should be extended to include the newborn, the SIP's for child's education and marriage should now be doubled, etc. Or your client may have lost one of his family members, so the impact of the loss must be accounted for financially in the reverse manner. It's important that the year end review with your client also includes a review of the major events during the year, and make provisions for the same in their financial plans.

Goals Review: Another major component of the Year end review is the Investor's Goals Review.

• An individual's goals are not constant, they evolve with time. With greater incomes, and upgraded lifestyles, the goal of a 2 bhk transitions into a 3 bhk, a targeted Kashmir vacation transitions into a Europe vacation.
• Life's major events as discussed above, also impact the investor's goals.
• The investor's goals might be approaching over the next or forthcoming years. It's essential that you start planning for the same by making the necessary changes in his portfolio. If an investment is attached to the child's higher education goal, and the child has entered the 12th standard, meaning the investor will be needing the money in a year's time. So, it's ideal to shift the investment into a more liquid and less volatile asset class like a Liquid Fund and be prepared for the goal.

Insurance Review: Lifestyle changes and rising prices require the investor to keep upgrading his insurance policies. You need not upgrade the investor's insurance policies every year, this exercise can be done once in every three years or so. However, you should make provision for any significant event in his policies when they take place. Addition of a family member in case of marriage or birth of a child, or deletion of a member, should be provided for. Purchase of a property, a house, a vehicle, etc., calls for added insurance since these are assets and are exposed to risks.

Building Relationships: Lastly, the year end meet is not just about business, it is also an opportunity to connect with your clients, to strengthen your bond with him/her on a personal level. Your display of concern for his son's admission, your sympathy for his father's fracture, an applaud for his promotion, will instill warmth in your relationship, the core of a successful advisory business.

To summarize, year end review is a comprehensive process, make sure that you cover all branches.

Investment isn't a one time activity, it is a step by step process, and every year end can be the right time to help the investor climb up a step.

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