Listen to this article
Manish Kothari started ZFunds in 2019. The Gurugram based national distributor relies only on network of individual MFDs from B30 cities and rural India to grow its business.
In just three years, the ND has onboarded over 3500 individual MFDs from real Bharat as sub distributors. Currently, the company manage assets of over Rs.300 crore in mutual fund and Rs.200 crore in PMS and bonds.
Let us look at this interesting story.
Inspiration
Before ZFunds, Manish had worked with Paisabazaar, which distributes direct plan of mutual funds. During his stint at the company, he realised that many people especially from small towns and villages have idle money but they do not find comfort in increasing SIP amount beyond Rs.5000 with the direct plan platforms. Instead, these people prefer buying insurance policies by paying annual premium of Rs.5 lakh from their neighbourhood agent. Reason: They find comfort in dealing with a person they know personally.
Another inspiration for Manish was under-penetration of mutual funds in these locations. Manish believes that no one wants to do business of Rs.1000-Rs.5000 SIP in these locations. He says, “People in these locations have adequate money to invest. In fact, we have received business for high ticket products like PMS from villages. In our experience, all they need is handholding by someone they trust with their money.”
Manish strongly believes that the concept of direct plans doesn’t work in real Bharat. “Direct plans can be useful for someone who knows about mutual funds. But for majority of people, they need handholding by distributors to invest in mutual funds. They want someone on their side who can guide them on their wealth creation journey and help them overcome their behavioural biases. And this is where personal touch plays a key role,” said Manish.
Why sub-broking?
One of the key reasons behind success of the insurance industry was its presence across the country, believes Manish. He said, “There are 750 districts in India. While mutual fund companies have presence across 180 districts, insurance companies have presence across majority of locations. Even a small size standalone health insurance company has 3 lakh agents, which is much larger than the total distribution strength of the MF industry.”
Manish said that insurance companies have done well in small cities and villages and his company wants to replicate this success story in mutual fund distribution business.
Creating new distributors
Initially, the ND onboarded some existing MFDs from small town and villages. However, there were less than 10 individual distributors in towns with population of 4-5 lakh. Hence, the ND started recruiting new sub distributors in these locations.
The company does content marketing by posting videos on their YouTube Channel, which currently has over 80,000 subscribers. In these videos, they explain to people about benefits of mutual funds and how they can earn livelihood through mutual fund distribution business. All these videos are in Hindi language with subtitles available in a few regional languages.
ZFunds also helps individuals clear NISM exam through training support and obtain ARN. Currently, the company aims to create 200 new distributors every month.
WhatsApp selling model
MFDs working with ZFunds can onboard new clients through WhatsApp in a few minutes. Investors need not download anything. They can simply send their KYC to their MFD through WhatsApp. The MFD has to upload these documents on ZFunds app. Subsequently, the system generates a SIP mandate form, which goes directly to the investor. Investors can authenticate it through OTP to start SIP from the next month. There is no need of UPI, internet banking and so on.
Response
Of the total 3500 sub distributors of ZFunds, over 3000 are new to the industry. All these distributors have built monthly SIP book of Rs.5 crore through 30,000 SIP accounts.
Interestingly, these distributors also sell PMSs and corporate FDs in small cities and villages, which require high ticket investments. Manish said, “Small cities and villages are home to many wealthy families. Many doctors, CAs, administrative officers and small business owners reside in these locations. I think MFDs should expand their reach to accelerate their business growth.”
