Listen to this article
While the mutual fund industry has seen impressive growth in recent years, a few challenges still remain. A key point of concern for the industry is the issues faced by MFDs in B30 cities to grow their business.
Cafemutual spoke to some prominent B30 MFDs to understand their problems.
Siliguri MFD Prabin Agarwal of Prabin Agarwal of Empowering Investors points out lower ticket size as a hurdle for MFDs in B30 locations. He said that due to this, MFDs have to reach a greater number of investors to grow their business. In addition, smaller locations have a limited number of HNI clients. Hence, MFDs have to acquire more retail investors, which increases the client acquisition cost, making it difficult to grow business.
Aurangabad MFD Chandrakant Amritkar of Amritkar Services feels that investors in B30 locations are more prone to panic due to a market correction and similarly, have very high expectations of returns from mutual funds, making it difficult for the MFDs to convince them to stay invested and follow the principles of asset allocation. Amritkar believes that AMCs should do more investor awareness programs in B30 cities to educate investors not only about returns but about the risk of volatility associated with it.
Jalgaon MFD Rahul Patel of Moneyguru Investment & Financial Services points out many investors rely on free but faulty advice given by relatives and friends. “Due to lack awareness, many people take investment decisions without thinking about risks and financial goals.”
Amravati MFD Meenakshi Sikchi of Rainbow Financial Services thinks that the incentives for MFDs in B30 locations are lower compared to the efforts required for client acquisition. She points some problems specific to smaller locations like lower earnings among the masses and lack of public transport facilities which increases transportation cost of MFDs. She also adds that there is lack of talent in smaller cities making it difficult to hire staff. She also shares that due to a smaller number of working women in these locations and a traditional mindset, female MFDs face gender bias in many daily activities like talking to a large group of men or traveling long distances on their own.
Cuttack MFD Manoranjan Acharya said that all the investment related communication is in English. He believes that AMCs should support distributors with investor education content in regional language. Other key challenges include competition from unregulated products, lengthy and complicated KYC process in mutual funds and lack of prompt query resolution by AMCs.
