Coronavirus pandemic | For financial advisors, being proactive pays

‘It was the best of times, it was the worst of times.’ That’s how Charles Dickens’ began ‘A Tale of Two Cities’.

He could well be talking about the shutdown following Covid-19 outbreak, which is threatening the very survival of most businesses. However, this is also an opportune time to step outside their comfort zone and become more proactive, if they want to retain their customers and safeguard their business.

Take the case of financial advisors. They often give investment advice and map their clients’ portfolio around long-term goals like retirement or kids’ education. Now is an ideal chance to realign this portfolio to help clients manage their cash flow for shifting life goals and ensure a steady source of income.

According to Sousthav Chakrabarty, CEO and Director, Capital Quotient, while an annual financial plan is a reliable solution it should be reviewed quarterly with changing requirements. These reviews should also identify underperformers or changes in strategy and accordingly implemented it in the investment portfolios. Of course, this means regular dialogues; not the usual attitude of “Fill it, shut it and forget it”.

Talking about how financial advisors can play a proactive role in predicting their clients’ needs before they do, Chakrabarty said “Create common use cases. Since they have the benefit of learning from experiences of a diverse group of clients, financial advisors can better coach their clients about upcoming requirements or circumstances, even before the latter has the chance to think about these.”

It is impossible for financial advisors to keep track of their clients’ financial goals or investments in real time without using financial tools. “Using predictive AI-enabled tools can help them track and identify areas of concern. They can then evaluate an action plan to be recommended to clients,” he added.

There are several free and subscription-based fintech tools that financial advisors can use for their clients’ data aggregation and asset management for proactive portfolio rebalancing. These include Omnimax, Arthayanta and Capital Quotient.

These tools can assist financial advisors keep a check on their individual client’s financial journey, without depending on manual processes that are more time consuming and prone to errors. Chakrabarty explained that Capital Quotient used an ‘Equity Underweight’ forecast model to showcase scenarios last year in July to clients in case of a market correction. “We had no clue about Coronavirus, but were fearful of bloated valuations and record high price to earnings levels of the markets. Subsequently in last nine months, while general clients would have lost 23 percent by now, our clients have instead gained 9.34 percent in the same period,” he noted.

The role of technology in the financial market is critical, since it has the potential to scale with ease and offer value across domains.