Listen to this article
The mutual fund industry is marching towards Rs. 100 lakh crore AUM. In this context, the latest episode of ‘Lessons from the Masters’ spoke exclusively about how MFDs/RIAs can prepare themselves for this opportunity.
Jignesh Desai, Co-Founder and Promoter, NJ Group in conversation with KS Rao, Head - Investor Education & Distribution Development, Aditya Birla Sun Life MF shared three solid tips to tap the Rs. 100 lakh crore opportunity.
#1 - Build a sustainable business model
A business model largely depends on your goals and vision. For instance, some MFDs focus on catering only to a particular investor segment (NRI, retail, etc) and some prefer having a limited number of clients (100 families, 200 families, etc). Likewise, an MFD may also choose from hiring a team or running a one-person show.
However, keeping clients' interests first and having multi-service/product offerings are the common principles for building a successful business model.
Spend adequate time with your clients to build trust and confidence. Don’t focus on growing assets as it is just a by-product and it happens automatically. Nurturing investor relationships requires personal attention and has no substitute. You should thus look at outsourcing business operations to allocate 80% of your time to clients.
In addition, offer multiple products and services to increase your wallet share from existing clients. You could add insurance, loan products, etc. to your existing mutual fund offerings.
#2 - Conduct regular business reviews
Don’t let your business run by chance. Instead, do regular business reviews to address business concerns timely. It is a good idea to start once a month and thereafter you may look at quarterly reviews.
If you have a team, sit down together for a collective review and analysis of every business aspect. Also, it is a good practice to set quarterly goals and create an activity calendar around them.
Finally, identify things that have or have not worked in your favour.
#3 - Explore untapped opportunities
Low mutual fund penetration and the limited number of active distributors hint at the vast opportunities in the mutual fund distribution space.
Many avenues still remain untapped. Universities and corporates are such untapped avenues which give you a large number of prospects in one place. Notably, reaching out to them and conducting interactive sessions turns out to be logistically easy and cost-friendly.
Also, it is a good idea to be ready with a short script on long-term wealth creation through mutual funds before reaching out to prospects.
Check out the video below
