34 | ALTERNATIVES WORDS | Daniel Kiernan
BUSINESS
www.opp.org.uk | JUNE 2011
Opt for extra ideas
The world economy might be feeling a little brighter, but the truth is that we are not out of the woods yet. Growth in many of the developed countries is fragile and another recession or double-dip downturn, although unlikely, is not impossible. So don’t stop looking for new ideas just yet. Your clients will appreciate a bit of inspiration.
in Q2 2011 to just 1%. In Europe, even as Portugal has just finalised a €78billion bail out with the EU, Greece has started making noises about re-structuring its bail out; and in the US growth slowed to an annualised rate of 1.8% in Q1 as the rating agency S&P changed their outlook on the US from stable to negative. In short, while there might be
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some strong projects out there that will be successful, we’re not going to see a return to the boom times for overseas property investment (or indeed selling mortgages, life cover or any of those other agent activities) any time soon. However, there are opportunities
out there for agents who are prepared to think differently and move into new territory by selling alternative investments.
5 Reasons Why You Should Consider Selling Alternative Investments • Unregulated • Diversify your product offering • A good reason to contact clients • Competitive commissions • Quick, emotion-free sales
Unregulated Alternative Investments are not regulated by the FSA. Very simply, this means that you don’t need to be a regulated person to sell them, so you can add them into your offering straight away.
Diversify your product offering If you’ve only got one product or one asset class to talk to a client about and that doesn’t appeal to them you could
n a survey of the G7 countries in April, the OECD reduced its estimate for UK growth
be walking away from a lot of potential business. By having a few more options you maximise your chances of fi nding something they are happy to invest in.
A good reason to contact your clients If you’ve been talking to clients about overseas property for the last 18 months with no joy, perhaps it’s time to change the record? Alternatives are a great way to re-start the conversation. And if you’ve got a bank of clients you’ve successfully sold property to, that same bank of clients may well be interested in something new if you get back in touch. Alternatives have
“If you get no joy when talking about overseas property, perhaps it’s time to change the record”
compelling hooks that pique client’s interest and you may fi nd that clients who you thought would never invest are suddenly willing to take the plunge. The best agents I work with always say “don’t decide for the client - give them the opportunity to say no”.
Respectable commissions
Obviously nobody is doing this for free. The commissions on alternatives are attractive and competitive with property and other investments and many agents have successfully added £70k to £100k into their businesses by expanding into alternative investments.
Quick, emotion free sales Alternatives don’t require leverage; don’t have high AMCs or operating costs; they don’t require open ended commitments with undefined exits; they don’t require lots of paperwork and regulation and they don’t have
the sorts of emotions attached to them that clients sometimes associate with property. You can make quick, emotion- free sales to boost your revenues.
5 Key Reasons Why Your Clients Should Invest In Alternatives • Diversify portfolio • Low entry levels • Termed investments with fi xed returns • Disillusioned with “traditional” investment strategies • Directly held asset
Diversify portfolio
This is just a fancy way of saying “don’t put all your eggs in one basket”. Most people in the UK have the majority of their wealth in property. This leaves them seriously overexposed
Daniel Kiernan is the Chief Investment Analyst at Alternative Outlook as well as being a director of Intelligent Partnership.
to one sector. No doubt many of your clients fall into this trap. If they have diversifi ed at all, they will have been advised to invest in either a stocks and shares ISA or a managed pension; and they probably have some cash savings set aside for a rainy day. The diffi culty is that when these commonly-held assets perform badly, they all perform badly at the same time and your client’s wealth takes a serious hit – as we saw in 2008. Alternatives give clients the opportunity to invest in assets that are not correlated with the markets and that
In an uncertain world | it can pay to have several diff erent options up your sleeve
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