The mutual fund industry is at a point where constant regulatory changes have forced distributors to rethink their business models. In this context, Cafemutual Confluence 2016 conducted a panel discussion in which experts from wealth management and boutique advisory firms shared their insights on the key trends driving the distribution landscape.
The panellists included Kartik Jhaveri, MD, Transcend Consulting, Mimi Parthasarathy, MD, Sinhasi Consultants, Neeraj Choksi, Jt. MD, NJ India, Satheesh Krishnamurthy, SVP & Head- Affluent Business (Wealth Management & Private Banking), Axis Bank and Sharad Singh, Founder & CEO at Investza.
Here are the key highlights of the session:
- The greatest enabler in our success has been technology which is supported with a robust advisory model. If you do not provide holistic solutions, it is easy for clients to move from one advisor to another. It is because of going digital that we have been able to reach out to clients in so many continents.
- When we talk about one-stop-shop, it is important for advisers to look at what they are offering to their clients. Financial planning is very basic; you will also have to focus on tax planning, estate planning, etc.
- Robo-advisory platforms can help in penetration of mutual funds.
- Though robos will help investors come on-board, eventually clients need hand-holding from advisors. I have been in this profession for more than 12 years now and I’m asked the same question very often – how do mutual funds operate and if they are risky? This shows that investors are still immature and need someone to guide them.
- Going direct is a convenient option only for low ticket investors or extremely financial savvy investors.
- Our focus has always been on deepening the advisory business. This can happen by building relationships with existing clients as well as through referrals.
- You need to have a certain level of intimacy with your clients and it can develop only through one-on-one interactions. To achieve this, you will have to create a team and give them training to keep client’s interest first.
- Every client is different so you will have to cater to their needs differently. Also, clients are willing to pay for the services you offer.
- A study conducted by the Boston Consulting group shows that globally 74 trillion dollar assets are under professional management. Of this, the total AUM of mutual funds in India is around Rs. 16 lakh crore which means there is a lot of opportunity for IFAs to grow in this space.
- Another interesting data shows that the share of bank deposits in India is around Rs.90 lakh crore. So there is a need for well-skilled advisers to spread the importance of financial literacy in India.
- Another untapped market is the B-15 market where many investors prefer traditional investments over mutual funds. Advisers can tap this opportunity to increase their client base as many people in India, especially from B-15 cities, do not invest in MFs.
- Adopting the digital route is another key trend in the distribution space as clients are becoming tech savvy and you need to constantly invest in technology.
- Last year, when FIIs were exiting the market, retail investors continued to invest. This shows that the level of maturity among investors is increasing.
- Technology is a critical part of the advisory business. The technology has to be simple and we should focus on how we can help investors use technology.
- A study conducted by Institute of Canada on investors with and without advisers shows that investors with advisers had 2.7 times more wealth than investors who did not consult any adviser.
- Technology does not understand investors feelings and therefore advisers play an important role in shaping investor behaviour.
- As life expectancy increases, the role of advisers will also increase.
- As robo-advisors, we are more focussed on the young age group as the population of youngsters is expected to go up. They are tech savvy and want to get access to digital platforms easily.
- As investors learn more about MFs, they will try to get access to direct plans since it is more cost-efficient.