We believe your fund house is widely present in B15 cities. What kind of challenges do you see in terms of communicating the benefits of mutual funds in small towns?
There are two big challenges in B15 market. One is to make people aware of the benefits of mutual funds and the second challenge precedes the first one i.e. convincing people on the need to invest.
In my experience, people in B15 cities are inclined towards traditional fixed income products. Hence, the key challenge for us is to convince people to invest without indicating returns. The role of an adviser is critical here. There has to be a human touch to develop people’s conviction in mutual funds and who are better than IFAs to do this job.
However, distributors should keep in mind not to encourage first time investors to get into equity products. The ideal starting point would be liquid funds. For instance, imagine a situation where you took a road trip of 1000 km. Assume that you took nearly 4 hours to complete the first 50 km due to bumpy roads. That moment, you may be wondering that you could have taken train or plane to reach the destination. The road is bad; the car is getting damaged so you start questioning yourself - should I go back? The same applies to mutual funds. If the initial journey is smooth, investors will stick to equity funds for long.
Do you think there is more wealth in rural markets as compared to urban markets?
If you take a deeper look at both the urban and rural areas, there is more wealth in the urban market. We need to understand if it is surplus wealth. A farmer who owns a land in the outskirts is wealthy on paper but he/she may not have investible surplus. So, urban scores over rural in this case.
However, in terms of number of investors, rural areas have an edge over urban cities. These areas provide huge potential for the mutual fund industry considering the large and young population in these locations.
You have witnessed a healthy growth in your assets. How do you plan to sustain this growth?
By doing exactly what have been doing so far - clear communication, assisting our partners and delivering consistent performance.
The idea is to build conviction among distributors and investors about our philosophy and process. We believe doing these basic things will help us grow our business and gain market share.
How will you go about creating awareness about your brand?
Distributors are the touch point for investors. Hence, our focus is on enhancing distributors knowledge to increase our brand awareness. We reach out to distributors through ground-level activities. In these programs, we try to upgrade their knowledge related to products, markets and business development. Also, our fund managers and sales team interact with our partners regularly.
Currently, we are figuring out how we can use the digital media to increase our brand awareness.
How do you plan to expand your distribution footprint?
We are planning to make inroads in both T15 and B15 markets through ground level activities.
We meet our partners on a regular basis to enhance their knowledge. Also, we try to seek feedback on their expectations from our products and services. We intend to intensify this activity.
Also, we have started focusing on creating new distributors, especially in places where we have deep roots like Eastern and North-Eastern parts of the country. We usually conduct training sessions for people in such areas and motivate them to take mutual fund distribution as a full time career. In the last two years, we have created close to 1,000 new distributors which include new cadre of distributors.
What do you think about e-commerce distribution? Will it be a threat to brick and mortar IFAs?
When the going is good, no one cares but when the market goes through turbulent times, one needs guidance. So IFAs will continue to be dominant players in the industry since investors need handholding to invest in mutual funds.
However, role of IFAs may not be the same going forward. People don’t need a distributor just to fill up forms and execute transactions. Such tasks can be done with the help of technology. Instead, IFAs should add value to their offerings by providing services like financial planning.
