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WF: At the outset Bala, thank you very much for agreeing to partner with us in our popular Saturday School initiative. Wealth Forum looks forward to working with your team to take Saturday School to the next level. How do you see Saturday School fitting into your overall distributor training and engagement initiatives?
Bala: We are very happy Vijay, to associate with Wealth Forum on the Saturday School platform. One of the key areas of our focus in recent years has been equipping our distribution partners from the knowledge point of view. We strongly believe that knowledgeable and well informed distributors, who understand markets and products, will be in a much better position to serve their investors better and make a bigger impact in the financial lives of investors.
Towards this end, we have devoted substantial efforts all of last year in multiple training initiatives, on motivational aspects, equity and debt markets, selling skills and product familiarity. We see Saturday School as a logical extension of these efforts as it is a platform that continuously engages the distribution fraternity with relevant knowledge inputs which help them understand markets, products and the economic environment to enable them to advice clients better. The assistance provided by Saturday School in helping distributors prepare for relevant certification exams is a key value add, as we believe that apart from enhancing their knowledge, added professional certifications will enable distributors to be seen as respected professionals by the investors.
WF: What are the contours of the Nipun Program and what is the road ahead for this distributor engagement initiative?
Bala: Nipun covers our entire gamut of distributor engagement initiatives, and is a program that we started 3 years back. We have given a nice shape to Nipun in the last one and half years under the leadership of KS Rao, who has been breathing, talking, walking, and spending every waking moment of his only on investor education and distributor engagement. In my belief this has brought the necessary focus for this key initiative which is very important for us.
We have a specialized team that focuses purely on distributor engagement - covering training, motivation, information dissemination as well as our Privilege Club initiatives. We are now looking at enhancing the scale and reach of Nipun with the help of a digital platform. Our goal is that Nipun should make a tangible difference in the professional lives of all our distribution partners and thus strengthen our relationship with them.
WF: Distribution expansion - specifically, increasing the IFA base - is a key priority for BSL AMC that you articulated last time we spoke. What are some of the ways you think we can meaningfully enhance the IFA base?
Bala: Lets first consider the facts to understand the magnitude of the distribution opportunity. If you take the universe of all retail savers in the country who constitute the target audience for mutual funds and divide that by the number of active ARN holders who are currently doing MF distribution business, you have a ratio of 1 active ARN per 28,000 investors. Its impossible to reach out to and serve such a large base unless you have a combination of large teams within each ARN as well as high levels of technology adoption. Considering how widely dispersed and fragmented our distribution is, I feel a ratio of 1 active ARN for every 1000 investors is where we should ideally be. This should give you a good sense of the magnitude of the distribution opportunity that lies ahead of us.
There is thus huge scope for existing active players to expand their business, for ARN holders who are inactive to become active and for a lot of new blood to come into the profession. We need to work collectively to demonstrate to young graduates the attractiveness of financial advisory as a profession - either as self employed individuals or employees of established distributors.
We have to be able to communicate our MF industry's vision that the current 1.74 crore MF investors will grow in the next 10 years to 20 crore investors. The magnitude of growth opportunity ahead of us for all stakeholders of the MF industry is what we need to be able to articulate effectively to young professionals and graduates.
WF: Jaanoge Tabhi Toh Maanoge (JTTM) has become a very popular investor education initiative. What are next steps for the JTTM initiative and how can your distribution partners leverage JTTM to reach out to new investors?
Bala: JTTM has indeed become a very popular investor education platform which we have created. There is strong recall for JTTM as well as the way in which it delivers effective messages to investors. JTTM is present on multiple media including TV, which helps enhance reach significantly. I would like our distributors to know that we will continue working on expanding the reach of JTTM very significantly over the next few years, and have substantial spends allocated towards this end. For distributors, the best way in my opinion, is to leverage platforms like JTTM and others that the MF industry is creating, rather than reinventing education platforms. The rub-off effect of all the awareness that JTTM is creating, can not only work for us, but also for our distributors, if they work with us in promoting JTTM and its messages into their client and prospect base. For more details, do visit www.janotohmano.com/
WF: What will you advise your distribution partners to focus the most on, to make the most of the current business tailwinds, and build robust, future-ready business models?
Bala: I think the whole focus should be on increasing their customer base. There is a huge opportunity in the next few years to bring in more investors into mutual funds than what we have done in the past 20 years. Distributors who recognize this and who align their efforts in this direction, should do very well, in my view.
A simple step forward is for every distributor to take a target - not an AuM or sales target - but a simple target of acquiring say 5 new clients every week. Take on such a target and create a plan to acquire 1 new client every working day. If you can stay focused on this goal, there is a market environment now that will support your efforts, investors are now more keenly looking at capital markets - and you will therefore be able to grow your client base. Sales and AuM will automatically come.
The other thing is how you bring these new clients onboard. Start with liquid funds, get them comfortable - don't rush into lumpsum equity for new investors. Build your SIP book with these new clients - that's what is best for them and for all of us.
The key I think is to have a simple plan, with simple solutions to offer to new clients, and work in a focused manner to bring in many more new investors than we have done so far.
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