At a time when there is a sharp decline in new distributors entering the MF industry, Chennai MFD Shanmugham has embarked on a mission to add new MF distributors (MFDs) on his own. So far, he has added around 50 distributors and has set an ambitious target of bringing 5000 new distributors over the next five years.
At Cafemutual’s CIFA 2020, Shanmugham shared his unique business model of creating new distributors and working with them to achieve collective growth with Sunil Subramaniam, MD and CEO, Sundaram Mutual Fund.
Let us look at his story in his own words.
I was a tax practitioner. Whenever I used to talk to my clients about investing in ELSS, they used to tell me that they had no idea about this product. I saw a huge opportunity in mutual funds and I changed my profession from tax consultant to mutual fund distributor.
Over the years, I realised that as an individual I can serve only a few investors. I then decided to add more people to my team and train them. However, instead of appointing sales executives, I focused on creating distributors to achieve collective growth. In my view, people put more efforts when they feel they own a business.
I started by approaching insurance agents as they deal with other people’s money and have a readymade client base. Through a comprehensive presentation, I explain to these agents that they need to sell a range of products and services that includes term insurance, health insurance, mutual funds, tax planning and financial planning. I train these people for AMFI exams.
I also tell them that while they can earn attractive commission initially through insurance agency, their business growth will be limited. I make them understand the power of trail commission and how their earnings could grow with time in mutual funds. Further, I explain to them that they can’t sell more than 3 insurance policies to a client; but this is not the case with mutual funds.
While selecting associates, I have only three criteria. A person should be client centric, should be willing to learn new things and should have full commitment to work. If someone has these three qualities, it is easy to train them about the product and client behaviour.
Now I am planning to add graduate students, homemakers and chit fund employees as well. My plan is to train these people for AMFI exams and help them with their first set of clients. After a couple of years of handholding, I encourage my associates to take the distribution business on their own.
