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In its latest vision paper, AMFI has highlighted five themes: simplicity, relevance, inclusiveness, behavioral & mindset change and last-mile connectivity for the mutual fund industry to cater to the diverse economic landscape of India. AMFI has also shared action points for key stakeholders like AMCs and distributors on how they can help achieve this.
Theme 1: Simplicity
AMFI has highlighted how lack of communication in regional languages and use of complex terms can make understanding of mutual funds difficult for many investors. It has suggested following action points for AMCs and distributors to make mutual funds simpler to understand:
Action points for AMCs
- Simplify apps and platforms to make them user-friendly and easy to navigate
- Use AI to give investors a personalized experience, behavioral nudges and interactive educational guides
- Partner with technology platforms to provide assistance and user-friendly features
- Equip RIAs and distributors with digital and AI tools to improve client conversations and product recommendations
Action points for distributors
- Develop user-centric platforms that incorporate regional language and intuitive design
- MFDs/RIAs should be trained to explain financial concepts in a simple manner while respecting the local culture
- Use AI tools to present investment options and simplify decision making for the investors
- Design clean, prioritized dashboards to minimize cognitive overload
- Ensure a seamless and consistent experience across both physical and digital channels
Theme 2: Relevance
AMFI believes that the future of mutual funds lies in the development of innovative products. The trade body sees thematic and specialized funds as a powerful mechanism to address the challenges of Indian diversity and recommends development of products specific to the life stage and financial goals of investors.
Action points for AMCs
- Assess viability of products for culture, trend and community-based funds while defining relevant benchmarks
- Leverage investor behavior analytics to refine product offerings
- Simplify apps and platforms to make them user-friendly and easy to navigate
- Equip RIAs and distributors with digital and AI tools for personalized client engagement
- Collaborate with AMFI for targeted and culturally relevant campaigns
Action points for financial advisors and distributors
- Train distribution networks to effectively pitch new products with a cultural and regional focus
- Develop region-specific strategies for communicating the benefits and strengths of mutual funds
- Utilize AI tools to simplify financial concepts and investment decision-making for investors.
- Ensure seamless, user-friendly experiences across both physical and digital channels
Theme 3: Inclusiveness
AMFI has pointed to visually challenged individuals, gig workers and illiterate/semi-literate individuals as untapped segments for the industry to focus on. It recommends the industry to have partnerships with NGOs and offer educational resources in braille and audio format to help visually challenged and illiterate/semi-literate individuals make informed decisions. It also recommends local language support and simplified onboarding to bring investors from these segments into the MF fold.
Action points for AMCs
- Assess gaps in existing products to ensure the inclusiveness and viability of micro investments
- Ensure adherence to regulatory guidelines related to inclusivity in product structures
- Evaluate the feasibility and cost-effectiveness of integrating features, such as screen reader and voice navigation in digital platforms
- Partner with technology providers to meet accessibility standards effectively
- Explore opportunities to collaborate with AMFI to build platforms that provide the necessary infrastructure for advisors and distributors
Action points for financial advisors and distributors
- Upskill and train to serve underserved segments like the visually impaired, gig workers and low-literacy investors
- Gain expertise in inclusive technologies and financial products designed for these segments
- Leverage platforms with built-in accessibility features to facilitate better investor engagement
Theme 4: Behavioral and mindset change
AMFI cites conservative tendencies in Indian families towards the equity market due to past losses, collective decision making and lack of trust as challenges for the mutual fund industry.
Action points for AMCs
- Build trust through transparent communication on pricing, market risks and growth potential
- Ensure prompt mechanisms to redress grievances and maintain investor confidence
- Provide personalized updates and nudges to investors to help them track progress towards their financial goals
Action points for distributors and influencers
- Highlight the power of compounding through real-life success stories
- Conduct regular meetings with investors and offer guidance at key financial milestones
Theme 5: Last mile connectivity
AMFI recommends use of local networks, small kirana shop owners and local markets as financial agents for expansion of the mutual fund industry. It also recommends use of trusted community networks like Jan Seva Kendra, post offices and cooperatives to increase mutual fund participation. The trade body is also looking at successful global practices to be used to fulfill this goal.
Action points for AMCs
- Reassess distribution strategies to ensure a balance between traditional distributors and local influencers
- Establish physical touchpoints for investors and partners to resolve issues efficiently
- Partner with local entities with existing touchpoints such as banks, post offices and cooperative networks
- Equip local partners with training, guides, content and digital tools to facilitate onboarding
Action points for distributors and influencers
- Provide hand-holding and personalized assistance to first-time investors
- Leverage real-time onboarding tools and digital platforms for seamless investor participation
- Use interactive educational guides to explain investment processes in a simple and relatable manner
- Organize regular meetups to provide updates, gather feedback and address investor concerns to build trust and long-term engagement.
