25th May 2012

Yeh dil maange more - par dil ki baat zubaan par kaise laaye? Lest you get other ideas, we are talking about advisors who longingly see large portions of their clients' savings going away elsewhere and only a fraction of the savings coming towards them. You want a larger portion of their wallet - but how do you go and ask for it and get it? Team ICICI Prudential has made it their mission to help you ASK FOR MORE - help you seek and succeed in getting a more meaningful share of your clients' savings - through a series of initiatives under a theme aptly called ASK FOR MORE. Aashish takes us through the contours of the ASK FOR MORE initiative and the first set of advisor aids that they have prepared to help you ASK FOR MORE. Ab dil ki baat, zubaan par laaiye....

WF : What does Ask For More signify? What is the key message to your distribution partners in this initiative?

Aashish : "ASK FOR MORE" is more a habit that we hope to inculcate in our advisor friends. There are various layers and nuances attached to ASK FOR MORE and in someway or the other in the last 1 year all our communication on www.wealthforumezine.net is linked to this concept. I would urge our readers to refer to one of our previous communications on your website the last question specifically http://www.wealthforumezine.net/AMCSpeakICICI291111.html.

Hence, ASK FOR MORE signifies the following:

1. Our first and foremost message of concern for the advisor and investor is the futility of 100, 500 and 1,000 rupee SIPs. All financial goals that an investor has are today costing in lakhs of rupees may it be retirement planning, children's education, house purchase or just a vacation. Over 95% of all SIPs in the industry are in the range of 1,000 to 2,000 rupees of input value which means they are definitely not linked to any goal. And SIPs which have no goal, are definitely going to close faster, and if they run the whole distance, they are anyway not going to take the investor close to these goals. Then why are we doing this? Any SIP linked to a goal has to have a realistic value and realistic tenure with a good chance of realising a goal when the time comes. Hence, advisors needs to ASK FOR MORE when deciding on the SIP value and tenure.

2. Most investors invest in mutual funds only by way of SIPs into Equity Mutual Funds. This is only the risk capital which represents a miniscule part of an investor's wealth. But the larger pie of an investor's wealth lies in traditional fixed interest products like bank deposits, bonds, company deposits, postal savings etc. Advisors need to actively promote fixed interest mutual funds to their advisor and ASK for a larger share of the investment pie of investors. This will come about only by promoting fixed interest mutual funds to a nation of fixed interest savers. Hence, advisors need to ASK FOR MORE by promoting fixed interest mutual funds like Short Term Plan, Regular Savings Fund or Corporate Bond Fund.

3. See the table below. What does it say?

It says that in December 2007, investors saw that the market had given more than 50% return per year. They ignored 22.9 times forward PE and gave loads of money to the industry - 33,986 crs in the last quarter of 2007. And all these investors - what did they get - they lost 50% in one year from Dec 2007.

Now cut to Dec 2008, investors saw that market had lost 50% in 1 year. Again they ignored 10 times forward PE and gave only 5,436 crs in the last quarter of 2008. All these investors - what did they get - NOTHING, they lost a potential upside of 73.3% on the index. And this repeats over and over again - in equity as well as in debt and MIP. What does this data say?

Investors invest based on recent past performance, they ignore all other variables.

Here in comes our third message in ASK FOR MORE - TODAY IS THE TIME TO ASK FOR MORE MONEY - IN EQUITY IN DEBT IN HYBRID FUNDS LIKE MIPS AND CAPITAL PROTECTION FUNDS!!!. With interest rates at historic highs and equity valuations nearing historic lows, TODAY is the TIME to ASK FOR MORE from the clients. Some time later when performance looks great, investors will be more than willing, but will that be the time for them to invest? Data shows that the past 1 year return of an asset class is key in determining inflows into that asset class - THIS IS NOT GOOD BEHAVIOUR BY US AND OUR INVESTORS - PAST 1 YEAR RETURN SHOULD BE A DETERRENT AND NOT DETERMINANT!!! So today, the past 1 year return is negative - that should encourage one to invest, rather than running away from the market.

Market is VOLATILE, it moves both way, people complain, but VOLATILITY is GOOD, it helps make returns.

Tell you investors - DAAG ACHCHE HAIN - VOLATILITY IS GOOD!!!

WF : In what ways are you encouraging and supporting advisors to ask their clients for more?

Aashish : We have made the kit with the first element of the ASK FOR MORE concept. There will be a series of elements around ASK FOR MORE. The kit currently contains very simple communication asking an investor "Why is your SIP a round number? Why is your SIP installment not something like Rs. 3,498/-"? Basic intention of popularizing this kind of question is to make people understand that if you want to reach Rs 20,00,000/- of saving in 10 years at a rate of 12% expected returns then your monthly SIP input value should be Rs 8,695/- Then why do we make SIPs of Rs 1,000/- or 2,000/- or 3,000/-? If your requirement is Rs 8,695/- you might have 2 SIPs of Rs 3,000/- each but ultimately one of them will be an add number like Rs 2,695/- I wonder why this never happens and then I am convinced it happens because none of these SIPs are targeted at a definite goal. They all have been done as a standard Rs 2,000/- X 36 or 60 months. Everyone thinks, lets do this and then lets see how it goes.

WF : Your SIP calculator is a fantastic innovation - can you take us through how it works?

Aashish : Yes, the calculator is our 2nd element in the ASK FOR MORE kit series. The first element asked the question. The second element is what helped me calculate Rs 8,695/- as the number. We know that all our advisors may not have or may not carry Laptops loaded with MS Excel for meeting SIP investors. Hence we have made a pocket calculator that helps an advisor calculate the following:

• Calculate the monthly SIP requirement to reach a certain target value of investment in a pre-defined period at a pre-defined rate of return

• Calculate the final investment value incase an investor is contributing a certain input value every month for a pre-defined period at a pre-defined rate of return

So arriving at the goals and their values to be achieved over a reasonable time frame, the advisor will there and then be able to tell the investor what he or she needs to contribute. And let me assure you there are no goals that can be achieved by making an SIP of 100, 200, 500 or 1,000. With those values you can only set aside some money, but it may not get you anywhere on your life journey.

WF : How can your distribution partners get these Ask For More kits?

Aashish : We have despatched ASK FOR MORE kits to a lot of our advisor friends. The kit has gone with literature on the first element that raises the question as I mentioned to you. We are now launching a unique SIP drive called SIP CHASE, which sets a very modest target to get our advisor friends activated on promoting SIPs of the right value. On acheiving the nominal target or a token target, we are giving them the calculator - the second element - free of cost.

Also it is pertinent to note that we have recently introduced SIP Insure - life insurance cover free on SIPs - this is also an endeavour which will encourage investors to make SIPs of relevant values, because the cover depends on your contribution in the SIP. To maximise the free life insurance cover, I am sure investors will have something at stake to properly calculate the requisite SIP value.

WF : What has been coming in the way of advisors asking for more and how should those inhibitions be broken?

Aashish : I think its only a mind set. There is one management lesson I have learnt over the years - YOU GET WHAT YOU MEASURE. Till now we were not correctly measuring the value of the life goals and hence the value of the SIPs was incorrect. We are now giving the tools to our advisor friends. Hopefully, some inhibitions will be overcome when the science is presented to the advisor and in turn to the investors.

My humble appeal to advisors is that let us not do SIPs for our investors by telling them "try it out" or "experiment". Lot of people tell me we are encouraging investor to try out SIP by putting 2 SIPs of Rs 1,000 each. Sounds logical - is it practical?

When medical health is in danger we dont take half the treatment and one quarter of an injection. Doctors don't tell us - "Not sure, eh?? Ok, Lets try half a dose!!!"

So then why experiment with Financial Health? By the time the experiment is proven right or wrong - a lot of time would have passed - and after having lost all the time - how will it matter if the result came positive or negative. Lets be clear - WE NEED CONVICTION, NOT EXPERIMENTATION!!!