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You have been in the industry for decades. What are your three key learnings during the period?
In the mutual fund business, you need to have patience. A lot of MFDs give up within a few years of joining the industry. Currently, around 1.20 lakh+ MFDs are there in the industry. I am assuming that at least half of this number would have surrendered their ARN license since inception. This is because of lack of patience.
Secondly, when the regulator comes up with a new guidelines or circulars, most of the time, we are not ready to adapt to the changes. As distributors, our focus should be more on taking our business forward rather than worrying about regulatory changes.
Thirdly, be loyal to clients. This will help you grow in the industry.
How has Prudent's journey been so far? What is the biggest achievement?
Prudent started in the year 2000 as a B2C player. In 2006, we launched our platform business which is our B2B vertical. I am very much satisfied with the journey so far. But we still have a long way to go. Currently, our AUM is close to Rs 48,000 crore and more than 24,000 MFDs have partnered with us. Initially we started as a mutual fund distributor but now we deal in multiple products including insurance, PMS, AIF, secondary bonds, unlisted equities, stock broking, fixed deposit, NPS, P2P, loans and properties.
Probably, we run the second-largest platform business for financial products distributors in the country and it’s still growing at a higher rate than industry’s growth.
Now we are a listed entity also.
What is your next plan in asset management industry?
We will continue to add new financial products in our offering. There is no plan to diversify into unrelated businesses. Our next agenda is to expand our technology offerings and improve service standards. Our aim is to become the most preferred partner for MFDs.
What is one achievement you would like to highlight?
The partner loyalty aspect has been good. Their attrition ratio is very less. Secondly, we are very proud of the technology that we have developed. Both our platforms — Fundzbazar and Prudent Connect — offer unique features.
Why do you think distributors should join a platform like Prudent?
Most new entrants in the industry are clueless about how to develop a long term business plan for mutual fund distribution. At Prudent, we introduce them to the intricacies of the business. We provide them the infrastructure and support which is needed to excel as an MFD.
Those joining the industry through our platform do not face the hassle of coordinating with multiple AMCs. Here everything is at one stop. Moreover, they get the support of our relationship managers, who have the same objective as the MFD — to enhance AUM by offering the right products.
Secondly, not all distributors are interested in investing in technology. Both transaction platforms and software service providers offer variety of services but they do no cover every aspect of MFD business. Also, you need to spend your valuable time in dealing with them and in managing stuff on these platforms and software. By becoming partner of NDs like Prudent, MFDs can save this time and increase their valuable time in acquiring new clients and retaining the existing ones.
Apart from tech support, we also support channel partners in client acquisition, client servicing, business analysis and after sale services.
Thirdly, platforms make selling of multiple products easier. You do not have to deal with different organisations to offer products like FD, Bonds, PMS, AIF, insurance etc.
What about MFDs who already have an established business with a few crore AUM?
The answer to this question again revolves around software, technology and timely support. If you do not have a good software, you cannot provide good service to clients. Low revenues make it tough for new MFDs to invest in software. For such MFDs, platform is the answer.
Platforms bring down the manpower requirement and hence saves cost. We believe our platforms can shoot up MFD’s efficiency and productivity by 30-40%.
MFDs need to do a neutral evaluation as to which option works better for them — direct or platform.
There are other reservations too. Many MFDs do not want to share their revenue and client details. They also want to create their individual brand. What is your view on it?
There are two ways to look at revenues — one is percentage and the other is amount getting credited to the bank. For most people, the total revenue is more important and platforms help them to raise that. Also, reduced operational expenses help them increase net revenue. Most often, the final earnings go up by 30-40% when MFDs work with platforms.
Coming to sharing of clientele. Sharing of data should be ok unless it’s being misused. In our 15+ years history in platform business, there is not a single case of client poaching. Our client mapping feature ensures that even if a registered client transacts directly on our platform, the transaction gets mapped to the partner. For us, our reputation among MFDs is more important. At the same time, when MFD deals with multiple service providers, data is shared with many people and that risk can’t be ignored.
Coming to the issue of branding, the purpose of branding is to increase business. MFDs need to evaluate what’s more important to them — branding amongst AMCs or amongst clients. MFD’s business grows when his branding amongst clients is strong. So this is the area where MFDs should focus on. We offer them various tools to create their branding. Prudent helps partners to have their own website and app. All client reports carry the branding of our channel partner.
ARN registrations are declining since ban on upfront commission. There's a sense that business has become unattractive. How are you managing to bring new MFDs to the business in such a scenario? How has been the growth in the last 3 years?
It’s true that ARN registrations declined post the ban. Till 2020, the market was also not supportive. I believe the trend has started to change from 2021 and now more and more ARN registrations are happening in the industry and at Prudent also. From April 2020, Prudent has empanelled more than 11000+ Channel partners which substantiate this statement. Moreover, the days of selling only one financial product are over. During the initial years of selling mutual funds, distributors need revenue support from other products to keep going.
How is Prudent handholding existing partners?
Our RMs are always there to handhold MFDs. We have kept our RM to distributor ratio low to ensure good service to MFDs.
Due to technology, partners’ connect with the management has also improved. Every month we do zoom meetings, wherein we provide them ideas to deal with tough situations like heightened redemption by clients or handling objections. We also conduct regular training sessions on products and technology platforms.
We have seen many unfortunate events during the covid pandemic. Industry has lost many distributors. What help did Prudent provide to families in such a scenario?
We run Prudent Loyalty Club program, which provides various benefits like health insurance, accident cover and life insurance to partners and their families.
Yes, there were few casualties in our system as well. Through health insurance, we were able to help our partners financially during hospitalisation. In case of death of a partner, we supported the family through term insurance.
We also help the nominee in clearing the NISM exam and take over the business of the deceased MFD. At Prudent, we provide single document transmission. This saves the family from the hassle of approaching each AMC separately.
