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Given the volatile markets, global uncertainties and changing regulations, how can MFDs/RIAs help investors stay calm and invested?
Markets are always uncertain. It is its nature that it cannot be fully predicted. Secondly, regulatory changes are requisite to maintain industry standards and ethics, which in turn provide comfort to investors and in turn their distributors.
As long as distributors/advisors can maintain investor asset allocation based on investors’ risk appetite, investors will continue to make long term gains.
Finally, equity is about long-term investing and by showcasing that volatility is an opportunity for long-term investors, MFDs can create a lot of value in their lives.
The MF industry has flagged off the Rs. 100 lakh crore march. Which three business skills can help MFDs/RIAs to participate in this Rs. 100 lakh crore march?
Persistent networking to tap increasing number of investor community, conducting investor education initiatives and participating and promoting mutual funds in local communities are key to bring in new investors. MFDs/RIAs combining strength through local associations have proven to be hugely effective in this regard.
For existing investors, handholding them during volatile times would be crucial. Investors value this support the most.
In your view, which are the untapped investor segments that MFDs/RIAs should focus on? Also, could you share some quick tips on how they can reach out to them and make them their clients?
Traditional savers relying on fixed deposits and insurance policies can be brought to mutual fund fold. Such investors are largely underexposed to equity.
Tapping these investors would require explaining basics of mutual funds, concept of power of compounding and first exposure should be recommended through SIPs especially through hybrid funds like multi asset funds and balanced advantage funds.
Once they start experiencing the benefits of equity through their SIP investments, gradually, MFDs should introduce other equity fund categories.
There has been talk around doing away with B30 incentive and introducing a fixed cost for bringing new investors. What is your view on this?
B30 incentives have been instrumental in bringing in new investors into the MF fold. It was natural that MFDs in these locations require additional efforts to bring new investors and they should be suitably rewarded. It is good that instead of completely doing away with B30 incentives, SEBI has proposed a different mechanism.
