I was in the business of marketing of retail financial products for roughly sixteen years, beginning 1994. When I began, it was the heyday of company deposits and plantations. Lloyd Finance, CRB Caps, Amrut Industries were the top deposit taking companies then; they were Aladdin’s lamps yielding 25% plus returns. Plantations too offered fabulous returns and came in all species – teak, coffee, citronella grass, you name it.
It was in such a market that I took up selling mutual funds; looked stupid. How do you sell a product that assures no return, has no track record and is difficult to explain to a customer who is spoilt for choice with assured 25% plus return?
Times have changed; market has tried MFs for a decade and half now; we have seen them return 25% plus through crashes and scams; the investor today is saturated with information that leaves no questions unanswered. We are at another bend in the road now.
But, just when it looked as if the retail financial products marketing was leaving the teething troubles behind, a pall of gloom has been cast by indiscriminate regulatory changes. After the abolition of the entry load there is apparently no incentive left in MF marketing. The AMCs themselves have sought to create alternative revenue streams; and the prophets of dooms are having a field day.
As if that was not enough, the insurance regulator has threatened to tweak the rules of the game. Can there be anything more absurd than stipulating mandatory life cover for pension products? One shouts from the pulpit that insurance is a long term contract, and then gives additional incentives to the policy holder to terminate his policy early?
At such a time, what does one do? Dig in and wait for tide to wash one away; or set sights on the horizon and ride the new tide. The choice one makes is what separates the winners from the losers.
Looking back over last decade and half, I see just one truth that has remained unchanged through changing times: he alone can survive who changes with the times. Back in nineties, we succeeded by selling not so much the MFs, but the MF concept. We earned for ourselves a livelihood by creating the market for a new product; for years to come we could dominate that market capitalizing on our entrenched position. Now change is once again pulling the carpet from under our feet; time has come to change once again.
Now, as then, the facts are not what will decide our future; it is what we make of them that will. In those difficult days, when month after month I would complain to my sales head of how hostile the market is, he would remind me of the story of the Bata sales manager.
At one sales meeting a young sales manager suggested entering a new territory, hitherto not touched by any shoe company; for the simple reason that hardly anyone wore shoes there. So every one else just laughed at the stupid idea. But the young manager was determined, and assured them that he could get business from the territory. In a few days time he left for the destination with a small consignment. Others just waited for him to come back dejected. But, to everyone’s shock, in a fortnight’s time the office received a call asking for a large consignment of shoes to be dispatched.
Well, my boss never told me how the Bata sales manager sold the shoes. But the moral of the story was clear: it all matters how you perceive the situation; some perceive it as an adversity, some as an opportunity.
It is difficult to get back to the model of distribution we worked with for last fifteen years; that may not even be desirable now. In a nascent industry it worked well. There were a few products and few distributors. It was in everybody’s interest to grow the market. So we worked together for that; commission was the wage for our labour. But over time both products and distributors have increased. And the ensuing competition has changed the function of commission; commission is now the price for winning a share in the market. When I began, commission on MF sales used to be as low as 1%; when I gave it all up it had soared to 3.5% plus; and then it has all but vanished into thin air!
But the proliferation of the industry has thrown up a new opportunity. Once upon a time the investor was ignorant; now he is confused with the information overload. When he wore no shoes we earned our living by teaching him to wear shoes; now is the time to teach him to choose shoes! There could be enough money in that.
Tensing has been active in the retail financial products space, both in marketing and training for last fifteen years.
