Question: What could be the top driver of growth for the mutual fund business?
Saurabh Nanavati, CEO, Invesco MF
- It will be digital and a simplification of the process.
- In India due to regulatory framework, we tend to operate in silos; we don’t co-ordinate with other industries, we are creating islands without coordinating with each other, which will hamper our growth.
Sanjay Sapre, President, Franklin Templeton Investments
- Focus on how to increase the number of investors, growth in AUM will automatically follow
- Focus of measuring industry’s success by AUM should shift to widening the reach if we want to truly grow; the underlying problem is there are not enough people talking about mutual funds.
- The biggest gap is the last mile reach; we need to create much larger and much vibrant distribution community.
Kailash Kulkarni, CEO L&T MF
- The growth driver for me is awareness, the awareness levels are increasing day by day, despite all news not being so great.
- Despite this gloom and doom in this industry, I look at it positively that we have added customers.
- People look at past returns and they come in and if the returns look attractive, surely more customers will be added.
Prathit Bhobe, CEO and MD, Tata MF
- In my mind, there are two things, while we want to do more awareness and make digital relevant. I think the real challenge is how am I enabling myself to deal with and manage more customers?
- Another opportunity is from the product side; the scope for differentiation is only at PMS and AIFs. The growth will bring scope for differentiation.
Sunil Subramaniam, MD, Sundaram MF
- Focus on growing IFAs. The key for the growth of IFAS is wallet share increase.
- IFAs can grow by mining client data and increase their share of wallet by showing them the past returns. This will be helpful in a low interest rate and inflation scenario.
Swarup Mohanty, CEO, Mirae Asset MF
- Product sanctity: Our job as manufacturers is to make good products, which you as an advisor can sell easily, and advice fearlessly to your customers.
- In any industry the war is on the product, it boils down to the product. As asset managers, sanctity of the product has to be important.
- As we strengthen our products, rest becomes easy. So I am a big fan of product development.
Question: Outperformance is becoming a big challenge. What are we talking about when we say “solid product”?
Swarup Mohanty
- I am just saying about the product being there, the expectation of market rightfully is consistent performance. We can all give consistent performance and earn enough and there is space for even more.
Sunil Subramaniam
- Categorization has shifted alpha generation to asset allocation; the advisor at his end can deliver alpha generation through asset allocation.
- The alignment of the income of the distributor or advisor is closely linked to success of the customer’s portfolio.
Sanjay Sapre
- Product rationalization has created pure products and our job is to deliver those pure strategies and in that we should compete and deliver the best performance but then the true alpha will come from asset allocation and to some extent from determining from where to put the money at which point of time.
- The product rationalization has also made products very clear and there is also an opportunity in fixed income.
- We are underpenetrated on fixed income.
Question: The ambition of achieving 1 trillion rupee AUM needs lot of distributors; where will they come from?
Sanjay Sapre
- I think the point that Sunil made is valid - the runway to success has become longer than earlier when you had an upfront model.
- Challenge is that it takes you longer to build enough of a book to become successful but what I want to remind people is that it is far easier to sell mutual funds today.
- There are less competing products in the market as people have moved away from gold, real estate or fixed deposits.
- We need to figure out along with the regulator, how can we support the growth of new advisors.
Question: What are we looking at when we say that awareness among people needs to be increased as today there are hardly any people who have not heard about mutual fund?
Kailash Kulkarni
- Awareness is growing on its own. Unfortunately, the recipe for this is not easy; it is a product of hard work and repeating the same message.
- We need to see if we are doing it correctly. At times, when SIP returns are negative, we get defensive and tell a story to the customer. Very few people actually carry data regarding the long-term performance on their I-pad to prove to their clients that SIPs deliver.
- A lot of us have put out good data points of the industry but we don’t seem to have it available with us when we need it the most.
- Today, when you face the customer in these times, when returns are negative that’s the time he is going to value you the most.
- This can also increase your prospective clients as customers will refer you to more people.
Saurabh Nanavati
- In this business you are creating permanent annuity, which no other business offers.
- IFA business is attractive given the huge opportunity and earnings, once you make it simple and can serve 10 times more clients.
Prathit Bhobe
- Just to add one more point on awareness, I think if you have a target it is not enough to create awareness; I think the customer experience is more important.
- The muscle memory gets built with experience. Trying to get more and more customers in to experiencing the product is important.
Question: How do advisors increase their engagement with their clients so that they end up having a higher share of wallet?
Sunil Subramaniam
- Keep the language simple. Talk about the whole portfolio rather than focusing on the successes and ignoring the failures.
- Own the responsibility for the whole wallet, even if you earn less because that itself will lead you to achieving the target.
Swarup Mohanty
- We need to understand that everything has changed post the SEBI circular (that came in to effect from October 2018). I think this was the demonetization moment for the industry.
- The dramatic change from the upfront brokerage is a big change.
- Two things are dead in the industry; a) transactional advice and b) selling on past performance.
- Our future earnings depend on growth of NAVs. That is a huge change for IFAs, we need to look at providing tangible solutions to investors now.
- Be accountable for your advice.
Question: - An actionable advice to IFAs to grow their business
Sunil Subramaniam
- Make sure that each one of your customers has liquid or ultra-short term folio where your investor can get 5% return which is more than SBI savings account return without taking taxation. I am guaranteeing you that you will get 5x in the next five years.
- If you market that to them what is the objection that they will have?
Prathit Bhobe
- My advice would be there is tons of intelligence sitting in various AMCs. The way forward is digital; all of you have to push AMCs to help you with analytics. Digital and analytics go hand in hand. You will have to start demanding what you need in terms of analytics.
Kailash Kulkarni
- If a fund house has a process, the investment will fetch returns, no matter if scheme changes or fund manager changes.
Sanjay Sapre
- Biggest untapped opportunity we have is creating retirement income stream using fixed income for retirees, I think its space we have given up for insurance industry.
- With simple products you can create retirement income stream.
- Sell SWPs for the sake of retirement.
Saurabh Nanavati
- Can we become paperless and how can we get 5x more clients and discuss it in detail and work towards it, that will help in the long run.
Swarup Mohanty
- Worldwide, owner driven advice is superior to employee driven advice.
- Make it an investor centric business, bring accountability to table, we can be a much bigger industry.
