Gamechangers: Dealing with Disclosure

Send this letter to all your clients - TODAY

In a nutshell

As a distributor, you are clearly worried about the conversations you may land up having with clients once the enhanced commission disclosure regulations kick in from October 2016. And, the anxiety has only increased after reading media reports that suggest that the regulator is unlikely to relent on this. Rather than passively waiting until October, a leading Mumbai based IFA firm has started sending out this letter to all its clients. While the firm does not wish to be named at this stage, they are happy to share it on Wealth Forum, for the benefit of fellow distributors who may prefer a proactive stance but need some guidance to get going.

What this simple communication does is to inform clients proactively, and give them a choice. You making your clients aware of the options and giving them a choice is far better than your clients getting to know that there was a choice which you never discussed with them. Getting clients to make a choice now, based on your letter, is likely to have a much better outcome than clients making a choice on the basis of information in a CAS statement.

Dear Client,

At the outset we would like to Thank You for choosing us as a partner for your financial well being!

We hope we have been adding value to you and your family's financial health. In case there is anything that you would like to discuss or provide any feedback, please feel free to contact us on connect@abc.com with a cc to xyz@abc.com

Your testimonials and encouragement are the fuel that drive us emotionally to keep providing better service. Other than that, our monetary fuel for the service we provide to you comes from the commissions we earn from the mutual fund houses that you invest through "Regular Plans".

We would like to inform you that you also have an option of investing through "Direct Plans" where we do not earn anything and you can manage your future investments on your own. We will still have your testimonials and encouragement from our earlier services to you to drive us emotionally!

The expense ratio of mutual funds in case of 'Regular Plans' is on an average 2.50% p.a. while the same in case of direct plans could be around 1.50% - 1.75% p.a.

If you would like to manage the investments yourself, do let us know and we will help you shift your existing portfolio to direct plans.

Kindly choose one from the below. We will appreciate and respect your choice.

1. I would like to continue with M/s. ABC under "Regular Plans"

2. I would like to manage the investments directly myself and opt for "Direct Plans"

___________________              _______________________________
Client Name                                  Client Signature & Date

Yours sincerely,

XYZ

Director

M/s. ABC & Co.

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