LIC MF registered an impressive growth during FY 2016-17. How was this done?
This is largely due to structural changes in our organisation. Earlier, LIC India employees had to work with LIC Mutual Fund for at least three years. They continued to operate just as they did in the insurance business. For instance, they would invite distributors to their office if they wanted to sell mutual funds.
Our former CEO, Nilesh Sathe, quickly realised that this approach did not work in this industry and discontinued the practice. He instead started hiring professionals from various fields through head-hunters. I came in February, 2016 and took this initiative forward.
We hired professionals who are good at managing other people’s money.
Until March, 2016, IFAs contributed to 98% of our business. Then, to accelerate growth, we decided to reach out to banks and NDs with the help of our parent company.
Initially, these large distributors were reluctant to work with us as they already had a tie-up with 25-odd AMCs. We demonstrated our unique products like the balanced fund that comes with a life cover, a liquid fund to pay insurance premium, and well-performing equity schemes.
In addition, we concentrated on three key parameters to increase our market share – offering customised products to cater to the needs of both institutional and retail clients, trying to deliver consistent performance across market cycles and reaching out to new distributors.
In fact, we have created an alternative channel of distributors comprising LIC agents.
Thanks to all these activities, our AUM grew from Rs10,000 crore in FY 2015-16 to Rs21,000 crore in FY 2016-17. We intend to cross Rs30,000 crore by the end of this financial year.
Your brand identity underwent change some months back. How has it helped you?
With Nomura’s exit in March, 2016, LIC MF become an Indian company with LIC, GIC, Corporation Bank and LIC Housing Finance as stakeholders.
We spent a lot on rebranding, and it worked out well for us. Earlier, LIC agents had reservations about working with an entity with a foreign partner. Now these agents are comfortable working with us. LIC agents now look upon us as family.
LIC is one of the most trusted and best-known brands in the country. How do you propose to leverage the parent brand?
We have reached out to corporates with the help of our parent company. Now we want to capitalise on our brand in B15 cities. Today many people associate LIC with insurance alone. We have to change this mindset and ensure people take cognisance of the fact that LIC has mutual funds with a good track record.
That is why we are focusing on showcasing the performance of our schemes. Our senior management team and fund managers travel across the country to spread our fund management philosophy.
We believe LIC’s brand, together with a good track record of performance, will help us grow business at the right pace. Our aim is to penetrate each household – ghar ghar LIC.
LIC has a formidable distribution network in every nook and corner of the country. How are you making it work for you?
LIC India has a captive force of 13 lakh distributors. However, these agents see mutual funds as competition.
So we are reaching out to them through our parent company to help them understand that mutual funds are not competing with them; instead, it is a complementary product. Under this exercise, we have approached million-dollar round table (MDRT) members who are doing exceedingly well in insurance distribution.
Each of their existing clients is going to buy mutual funds for wealth creation. We encourage them to reach out to such clients and seize the opportunity. Because if they don’t introduce mutual funds to their clients, someone else will.
A few agents have realised this and come on board. So far, we have added 300 LIC agents to distribute our products.
We have developed a mobile application to help prospective distributors clear the NISM test.
The MF industry is growing fast but the number of distributors is not going up as fast. As an industry veteran, what do you think should be done?
There are 20 lakh-odd insurance agents. Considering only 50% are active, we still have a captive force of 10 lakh agents.
I think we should reach out to them and encourage them to sell mutual funds. We need to help them identify how they can diversify their offerings through mutual funds.
What new initiatives are you planning this year to enhance distributor engagement?
We carry out investor awareness programmes with distributors. The idea is to help them conduct such programmes and give insights to the audience about mutual funds.
We also conduct training programmes for the knowledge enhancement of IFAs. We invite experts and professional speakers to help them upgrade knowledge and keep them motivated.
