Birla Sun Life Mutual Fund’s Privilege Club has been received well by IFAs. On its second anniversary, Navin Tewari, Head of Sales & Marketing, Birla Sun Life AMC shares more details of this initiative.
What was the purpose behind starting Privilege Club?
The idea behind Privilege Club was to create a platform that rewards and motivates IFAs who are doing quality work. The idea was to devise a platform that helps extend our relationship with IFAs beyond mere transactions.
Today, the performance metric (and rewards) for IFAs empanelled with AMCs is directly correlated to quantum of business generated. Revenues for an IFA continue for as long as he remains professionally active. Should any IFA be unable to remain professionally active, how does he support himself and his family? That was the very first concern that we addressed through Privilege Club
Secondly, IFAs work in this industry for 10 to 15 years and they are not covered by any retirement benefits. Since it is an unorganized sector, who takes care of IFAs after they retire?
This thought process led us to create Privilege Club – the first and only platform of its kind in India that plays a meaningful part in the lives of IFAs by preparing them for life’s eventualities.
On what criteria are distributors selected for this club?
Any IFA registered with AMFI can be a part of Privilege Club, depending on assets and quality of assets. For membership criteria, we do not take into account net sales or incremental assets by IFAs. The main criterion is the stability of money in different asset classes. We give more weightage to stable and long-term assets.
What benefits do advisors get as a part of this club?
We identified critical eventualities which IFAs could face in their life. First is their own and their family’s health and the second, their own mortality.
Paying for medical costs is a financial burden on any person. Under Privilege Club, based on his club status, the IFA and his family are protected with medical coverage. The IFAs are also provided with a term insurance cover. So in case something were to happen to the IFA, Privilege Club provides a cushion for his family in his absence. This is how Privilege Club is structured to partner and support IFAs through a relationship that goes beyond a lifetime.
IFAs do retirement planning for their clients but sometimes they forget to plan for their own retirement. For this, we have developed a retirement plan called Golden Age Plan (GAP) for them. In GAP, 5% of the IFA’s commission is deducted every month and an equal contribution is made by Birla Sun Life AMC which gets invested in a retirement benefit plan.
GAP is a unique scheme for our IFA partners and has been received well cross the IFA community. Many IFAs have thanked us because they have accumulated a significant corpus for their retirement fund. We also provide child scholarships to children of our IFA partners. In 2012 we have provided child scholarships worth Rs 9 lakh to 57 meritorious children of IFAs.
How many advisors do you have in this club?
Since the inception of Privilege Club on January 10, 2011, we have enrolled approximately 10,000 IFAs under this club.
How have the advisors responded to this initiative?
The response has been very encouraging. This is the first program in the industry which is not centered around business or driving sales; it encourages quality business and right recommendation of products while focusing on our IFA when he is focusing on the investor.
What are the new initiatives in the pipeline for advisors?
The Privilege Club itself is a big initiative that we have undertaken. There are many activities which we have included in it. For example, we are setting up Privilege Club Advisory Councils in zones across India. The members of this council comprising Club members and our internal team will meet every quarter. The objective of these Advisory Councils is to have a structured interaction mechanism through which we can understand the IFAs’ point of view, understand opportunities for their growth and learn how we can better support their requirements to further the interests of the distributor and their investors.
Has it today become imperative to engage with advisors in a meaningful way rather than working solely on commercial terms? Many AMCs are trying to upgrade the skills of IFAs through training and other activities. What is Birla Sun Life AMC doing to engage with IFAs?
Training in isolation does not help. We structure our training depending on their needs and profiles of IFAs and their customers. We provide training across India on a host of modules. We profile our IFAs to know their target audience. All our trainings are customized to the type of clients our IFAs are serving. We encourage our IFAs to share their inputs on what kind of trainings they require.
In fact, our Recurring Savings Plan (RSP) was launched basis feedback received, for IFAs whose clients do not have a high risk appetite.
How does an AMC get the loyalty of IFAs?
Activities created with the sole purpose of gaining loyalty don’t quite often meet the mark. Loyalty is a by-product, it is the end-stage of a process that follows and encourages right practices, remains fair in terms of product positioning and which has transparent and fair reward mechanisms. Whatever you do has to be fair, transparent and honest without any catch.
In the case of Privilege Club, it is an initiative that is a win-win situation for investors, partner IFAs and the AMC. Privilege Club adds value to our partners, investors, distributors and lastly to AMC.
What is your advice to advisors at this juncture?
I have seen this industry closely for the last 18 years. There was never a year without regulatory change. Back in Feb 2001, regulation mandated us to upload NAVs by 8:00 pm every day. Later in March 2004, PAN card became mandatory for investors. Back then, many thought that the industry would not grow given such tough conditions. The same was the response when KYC became mandatory for all mutual fund investors in Jan 2011.
But even in spite of these ‘apparent’ hurdles, we have seen how the industry has grown in the last 20 years. Between 1993 and 2012, the industry’s assets under management have grown 17 times over.
Regulators will do what is good for the industry and what is good for investors.
The only thing IFAs need to do is to focus on their customer’s needs and how they can best fulfill them. A large part of India’s population remains unserved with quality financial advice. IFAs need to reach out to their customers with the right value proposition and the right advice. We have a long way to go and the future is bright.
