CEO Speak 22nd December 2014
A Fundtastic investor education program
Harshendu Bindal, President, Franklin Templeton Investments, India
 

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When it comes to online investor education, all of us are told that investors' attention span is very limited - say what you need to in a couple of minutes, no more. But FT's latest investor education initiative has got thousands of investors logging in, registering, and spending an average of 32 minutes each in soaking in the educational content! Read on as Harshendu takes us through the Fundtastic Cup educational initiative that delivers investor education through a novel game of cricket. Harshendu also shares his insights on two key industry imperatives : distribution expansion and the retirement business.

WF : It's now been a little over 2 years since SEBI asked the MF industry to create the "2 bps" corpus for investor education initiatives. How do you assess the work done by the industry in these 2 years on investor education? What are the significant achievements and what are some of the weaknesses that need to be addressed?

Harshendu : The decision to set aside 2 bps of management fees for investor education programmes has been a significant step and has ensured that there is a substantial pie of funds available specifically for awareness initiatives; something that we believe will result in a steady growth of the market.

We also believe that increasing financial awareness in a large and diverse country like India will have to be a long term effort built on a private-public partnership basis involving all financial sector players. A well informed and fully aware investor base is important for a growing economy like India, as it fosters financial stability with expectations aligned with market realities. However, such initiatives need to encompass distributor-related programmes as well. The incentives to increase penetration beyond top 15 cities and steps to increase distribution base along with product labelling are positive for retail penetration. Also, recent initiatives like the District Adoption Program will help enhance penetration and aid industry growth in the long run.

Among challenges, I would say that ensuring the messaging to investors is consistent across the industry would be important.

WF : What are FT's main initiatives in investor education? What are your key learnings after 2 years of this concerted effort?

Harshendu : We have a dedicated investor education platform called the Franklin Templeton Learning Academy. Over the past decade, the academy has conducted several programmes not only for investors but also for advisors and distributors. However, the challenge was to hold simultaneous programmes across the country that too in the language of choice of the audience. The only answer was technology, so we took the programme online last year. Currently we offer online modules (videos) for both investors and advisors. We have 22 investor videos and 9 advisor videos across 5 languages - English, Hindi, Gujarati, Tamil and Bengali. All of this is freely available on www.franklintempletonacademy.com. The investor videos are short and crisp with animation to make it more interesting. The advisor videos are more detailed to explain all the concepts end to end like in a classroom. We also give e-certificates for those who view the modules and answer the questions pertaining to the modules. You can watch the videos on any internet enabled device.

We have also extended our investor education initiative across 10 districts allotted to us under the District Adoption Program of SEBI and AMFI. We have named this initiative 'Shubh Laabh' - so as to help investors learn, invest and prosper through mutual funds. At an industry level, this initiative is spread across 188 districts in the country adopted by various fund houses.

Our latest initiative in investor education is the launch of a mutual fund quiz themed on the game of cricket called the Fundtastic Cup. Our aim is to educate investors about mutual funds in a way they like and we felt that nothing could be as good as a game of Cricket to explain the concepts of mutual funds.

For more details visit www.fundtasticcup.com

WF : What is the "Fundtastic Cup"? How do you plan to educate investors through this? What has been your experience in this initiative's in the initial months?

Harshendu : Fundtastic Cup uses gamification to educate mutual fund investors through India's favourite game - CRICKET. This is an online game spread across four 'innings' with increasing level of difficulty. There are nearly 2000 questions or 'balls' with each 'over' consisting of 10 'balls'. The questions are in the form of multiple choice, fill in the blanks, unscramble, match the following and find the word. The game can be played on a computer or a mobile phone with many prizes to be won at various levels of the game including a grand prize - a trip to Australia - for the final winner.

The 'Fundtastic Cup' has received tremendous response from participants. Within a span of four months, the game has received around 65,000 registrations and the average time spent on the game by participants is 32 minutes. This response provides ample testimony to the scope for further innovativeness in investor education in India.

WF : FT has always been known for its emphasis on distributor training. What are the specific areas you are focusing on in terms of distributor training? What are plans ahead in this regard?

Harshendu : FT has been driving distributor training through the Franklin Templeton Academy (FTA). The Academy has been instrumental in creating informed and knowledgeable advisors with an emphasis on building the advisory business. The focus has been to build competency in practice management and financial planning.

In addition to delivering classroom and Instructor led programs FTA has built a digital platform to help distributors access learning and certify themselves any time, any place, any device that too with a choice of 5 languages. We have a suite of courses online that can upskill the advisor in various important aspects of the business ranging from modules under Investment Concepts, Client Management and Professional Development. In fact, the FTA has democratized the learning experience by making it possible for advisors anywhere in India to learn courses that hold most relevance to them at their convenience.

In case of Instructor lead trainings, we will be more facilitative and participation oriented. The focus for the year ahead will be on Practice Management and Product /Solution delivery. We will constantly reorient ourselves programs to help distributors engage with their customers better and in turn grow their business.

WF : A key industry requirement is expansion of the distribution force which shrank considerably in the last 5 years. What steps do you think we need to take to materially expand distribution? What do we need to do at an industry level to showcase financial advisory as an attractive career option?

Harshendu : Since awareness about mutual funds is very low, they are still a push and not a pull product. To improve awareness as well as widen the mutual fund foot print, it is important to have a strong distribution network spread across the length and breadth of the country. This network also needs to be well trained to explain all aspects about mutual funds to investors before selling.

There is clearly a need to widen the distributor network as demand for mutual funds is expected to rise especially in the B-15 towns. Regulations like the 2 basis points (of AUM) to be spent on investor education, added incentives for selling mutual funds in B-15 towns besides initiatives like the district adoption program are clearly helping to build traction for mutual funds. To service this wider investor base, the need for local distributors will be crucial.We, at Franklin Templeton, are already using the district adoption program to engage with potential distributors and trying to create an entrepreneurial platform for them by means of training, logistics, collaterals and other support so that they can create happy clients.

As an industry too, we need to work cohesively in this direction by consistently mentoring distributors and helping them make a career in mutual funds. I would also encourage key industry associations to join us as mentors in this task.

WF : A fair amount of excitement was visible in the industry a few months ago on talks of MF promoted pension plans getting attractive tax breaks, which would pave the way for robust retirement businesses to be created by the industry. Where are we on this front? What do we really need to do to create a meaningful retirement vertical within the MF industry?

Harshendu : While there was a mention of uniform tax treatment for pension and mutual fund linked retirement plans in the Budget, the SEBI Chairman subsequently clarified that if any AMC wants to launch a pension fund, it can do so with SEBI and CBDT approval. Currently there are two AMCs (including us) which offer pension funds with tax benefits under section 80C.A few more have recently applied to SEBI and are awaiting approval.

This is surely a step forward but more needs to be done on this front to bring home the importance of retirement planning especially when India lacks a social security system. The ultimate incentive for retirement planning, however, would be allow tax benefits to mutual funds at an employer-employee level under section 80CCD(2).This would certainly help incentivize retirement planning in a big way. At Franklin Templeton, we are working on a Retirement Planning Solution which we propose to promote strongly so as to increase the retirement kitty of the common man.

WF : There seems to be a broad consensus that we are at the beginning of a new economic growth cycle. What are FT's plans to harness this cycle optimally? What more should your distributors expect from FT going forward?

Harshendu : We would want our investors to move away from investing according to the market cycle to investing for the long term.Towards this objective, we are training our distributors to offer solutions with our products as underlying. We have a great line up of products across equity, debt and hybrids with a good track record of performance. These solutions would be market timing agnostic and focus on the goals of investors.

Besides training, distributors can expect our processes, line of communication and products to have enhanced client centric features so as to help them meet investor expectations. We would also invest in technology to ensure smoother delivery of our services to distributors and their investors.



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