A growing economy, coupled with favourable investment policies from the Government, has prompted Non-Resident Indians (NRIs) to consider investing in India. An active foreign policy, a bullish local economy, along with stable and predictable policies are the pillars for building trust with NRI investors. Experts believe that such a conducive environment is now existing in India and this presents a golden opportunity for financial advisors with local expertise. However, managing NRI investors requires a different skillset. Along with a thorough understanding of the taxation and KYC norms, one needs to be able to build trust and be relevant. Here is how you, as a financial advisor, can develop and manage NRI relationships.
1.Ensure KYC Compliance
KYC norms for NRIs are tougher than those for resident Indians. As a financial advisor, you ought to be aware of these norms as these can make or break a deal. The following documents are required for NRI Investors desirous of investing in mutual funds in India:
a. Duly completed Know Your Client (KYC) Application Form (For Individuals)
b. A certified true copy of the overseas address and permanent address
c. A certified true copy of the passport
d. In case of Merchant Navy NRI’s, the Mariner’s declaration or certified copy of CDC (Continuous Discharge Certificate) is required.
If the documents, attestations, or certifications are in a foreign language, they need to be translated into English. Further, some fund houses insist on in-person verification. In specific cases (e.g. investors from US or those who are politically exposed), you can consult an expert regarding the applicable KYC norms because NRI investors from US can invest in mutual funds only when they are present in India, and on their own accord. Fund advisors cannot solicit investments.
2.Build Trust
Trust is one of the fundamental pillars of any thriving business and financial advisory is no different. As an advisor, you need to invest in build this trust. There are many ways to do this and your knowledge, and local expertise is your best bet. Staying in touch with your NRI clients, updating them about the trends and developments is the first step. For example, update them about any regulatory changes that can have a direct or indirect impact on their outlook, investments, and portfolio. Help them understand the implication of the changes. You need to be their eyes and ears in India.
3.Offer Holistic Solutions
A wider array of assets leads to diversification, one of the core tenets of investing. While investment in equities offers capital appreciation over the long term, debt funds cushion the portfolio during market swings. Liquid and ultra-short-term funds are better bet for instant liquidity and building an emergency corpus. On the other hand, fixed deposits offer assured and guaranteed returns, though the interest income is taxable. NRIs are generally interested in real estate assets in India. Hence, you must keep an eye open for opportunities in alternate asset classes.
While managing NRI investors, you need to go beyond business and build relationships. Since you will be their money manager in the country, you must help them make prudent choices and formulate a disciplined local investment strategy.
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