1. MARKETING MANAGEMENT FOR LIFE INSURANCE AGENTS
PART- 10
(TARGET MARKETING- POSITIONING)
âWHEN AN INDIVIDUAL GROWS BIGGER, HE BECOMES AN ORGANISATIONâ
POSITIONING SELF âEVOKING A SENSE OF REPAYMENTâ
Mr. Customer, let me explain why you will need a trustworthy expert advisor?
You need a good advisor who know the ïŹnancial instruments and also knows you
well to design the right mix for you and also to stay by you to help you reach your
goals.
Many feel that ïŹnancial planning or selecting a product is only a matter of IRR calculation.
Truth is far away from this. For example, let us say one Mr Atul wants buy a ïŹnancial
instrument which will help him to fund for his daughterâs higher education, twenty years
from now. He is aware he can spare 3000 per month towards this goal and expects that
he should have 2000000 for this purpose. A simple IRR calculation says, that to achieve
this goal he must select a product which can yield 15% returns. Looking back into the past
let us say an equity based SIP has shown this return, all that he has to do is to select that
scheme and stay invested all through the twenty years.
No, it is not just that simple.
While 15% yield can do the trick, it is crucial to know what are assets he his holding or
proposing to acquire before selecting this product. How much risk can he afford to take?
How long can he hold-on without having to compromise on basic essentials of his family,
during a bear phase.
Taking undue risk to loose capital in search of big returns is foolish, and at the same time,
not taking enough risk can ultimately be the biggest risk.
When it comes to risk evaluation, it is not just the mathematical chance or statistical
probability of the loss that matters, it is even the emotional strength of the person involved
that need to be estimated before he can be advised of taking risk. This is not possible for a
machine or for a website by asking you a few questions. A sincere professional, who can
ask the right questions and can subjectively estimate the investor, can alone provide the
correct answer.
That is why, while at the time of selecting a product that can yield a 15% CAGR, that will
help his to reach his goal of 20L the investor is up-beat. But when the yield swings from a
+30% yield YOY to - 55% next year ( NAV100 became NAV130 next year and NAV 72 the
year next), the investor is so scared, that he would capitulate from that SIP. Objectively it is
a loss of 28% of the principle, but psychologically it is loosing more than 55% and the mind
projects that if this continues then he would loose the whole capital next year itself. See
Figure1
2. This does not happen to everyone. Let me explain look at the person who has invested
100% of his savings into this instrument and another person who has invested 30% of his
savings into this instrument. We may not expect the same behaviour from both these
persons.
Professional support is absolutely required not just at the time of selecting the investment,
but all through the period of investment. Let us take the example of Mr. Atul again, it is
likely that the investment he has selected in SIP has already grossed 20L (or almost close
to that ïŹgure) in the 15th year itself that is 5 years before the goal itself, now he must be
advised to shift a major proportion of this investments into low yielding but safer
instruments. Normally in that situation, during a bull run to shift the investments to less
attractive products requires the emotional strength of a willingness to forgo the present
happiness for a future happiness. Individually this is difïŹcult but assisted by a professional
this is possible. See Figure2
3. You need a good advisor who know the ïŹnancial instruments and also knows you
well to design the right mix for you and to stay with you to guide and assist you in
reaching your goals safely and surely.