Even though the mutual fund industry has seen tremendous growth in recent years, the industry has a long way to go especially in terms of increasing the customer base. The panel discussion on ‘Broadening the customer base for mutual funds’ at the AMFI Summit on Thursday highlighted that distributors could help the industry in making mutual funds a mass product.
The panel included Sundeep Sikka, CEO of Reliance Mutual Fund, Nilesh Shah, CEO of Kotak Mahindra Mutual Fund, Kailash Kulkarni, CEO of L&T Mutual Fund, Saurabh Nanavati, CEO of Invesco Mutual Fund, Dhruv Mehta of FIFA, Niraj Choksi, Joint MD, NJ India and Nitin Rao, Group Head (Private Banking, Third Party Product Sales and HNW vertical), HDFC Bank.
All panellists agreed that increasing the distributor base is a key step in broadening the customer base, especially from the B15 locations. “Currently, the industry has 2 lakh distributors that take care of 2 crore people. Hence, on an average one distributor takes care of 100 investors. It is imperative that if the industry wants to increase the investor base, it has to create more distributors to onboard customers. A tenfold increase in the number of distributors will help the industry accelerate its growth rate,” says Dhruv Mehta, Chairman, Foundation of Independent Financial Advisors (FIFA).
Seconding Dhruv’s view, Nitin Rao points out that distributors can leverage technology to grow their customer base. “As a bank, we have created a virtual network which helps us take care of 2,500 customers. Something similar can be initiated which can help distributors take care of their growing number of investors,” he says.
Speaking about ways to broaden the customer base, Sundeep Sikka, CEO of Reliance Mutual Fund is of the opinion that investor behaviour needs time to change and till that time, fund houses should constantly put in efforts to encourage people to take up mutual fund distribution as a profession.
Nilesh Shah, CEO, Kotak Mahindra Mutual Fund, feels that one of the best ways to broaden the customer base of mutual funds is to learn from the experience of others in the personal finance industry like banks, insurance companies and pension fund managers. “The industry should incentivise mutual fund distributors in line with other financials products like insurance and NPS. This would help us motivate them to continue to distribute mutual fund products,” says Nilesh.
Focussing on the need to lay more emphasis on the number of investors rather than AUM, Sundeep says that AMFI should disclose the number of new investors onboarding in a particular month. This would help the industry get the true picture on penetration of mutual funds so that fund houses can put in efforts to acquire new clients and increase their customer base, he adds.
Some of the other means the panel discussed to broaden the customer base are ad campaigns in the local language, and an innovative and catchy tagline to portray the mutual fund industry.
