There is a simple proposition which I believe can become a significant business opportunity for AMCs and distributors. It's an idea that I have been talking about for 2 years in our Wealth Forum Platinum Circle Advisors Conferences. As I mentioned in the last conference, either somebody needs to tell me why it's not a good idea, else, some AMC should take the lead to bring it to market. Think Debt is all about new paradigms for debt funds - no better place than this for me to table the idea once again. Hopefully, somebody will hear, somebody will act.

Which retail saver does not need a contingency fund?

One of the first things that any advisor suggests to all clients is to keep aside some money in stable, liquid avenues towards contingencies. Some believe this should be 3 months salary, some say 6 months salary. Whatever be the number, its not an insignificant one, and as more and more investors pay heed to this advice, the aggregate can become a fairly large pool of very stable assets. After all, how often does one really dip into a contingency fund?

Now, put on a marketing hat and consider the opportunity. Given the abysmally low number of advisors we have in a country as vast as this, and given the rather limited advisory time that can be made available by them to retail investors, what is the percentage of retail savers in the country who may actually be getting this advice and acting on it? 5-10% at max? And what percentage of retail savers need a contingency fund? 100%?

Which product is best suited for a contingency fund?

Which is the best product for a retail saver's contingency fund? Savings bank account balances? FDs? Or liquid funds? All of us agree that liquid funds / ultra short term funds are perhaps the best avenue for any investor's contingency fund. If that be the case, how many "Contingency Fund" products do we have from our MF industry? Sure, we have liquid funds. But do we have "Contingency Funds"?

What's in a name?

What's in a name, you might ask. Everything. Ask a retail saver what he understands about "liquid funds" and then ask him what he understands about a contingency fund for him. The term "contingency fund" directly addresses a core need of his, whereas the term "liquid fund" describes certain product attributes, which he frankly may not care too much about. So, what will appeal more to him?

If an AMC were to advertise a scheme with a name XYZ Contingency Fund, how much more sales traction will it be able to garner from retail savers than advertising XYZ Liquid Fund? How much easier will it be for a distributor to sell a Contingency Fund for contingencies, than explaining what a liquid fund is and then showcasing why it is suitable for contingencies? What would be a simpler and more effective sale? What will investors understand more and readily buy into?

Now, take it a step further. Give out a little plastic card (like debit and credit cards) called XYZ CONTINGENCY FUND with the investor's name and folio number on it. Provide space on this card for the distributor to write down the text to type for the SMS invest and redeem facility. Let distributors hand over this card and advise clients to keep the card safe in their wallets, with instructions how to redeem if required, using the SMS facility. Will this complete the loop for the investor? Will he now have the satisfaction that he has not only set up his contingency fund, but is in complete control of his ability to deal with contingencies? Will this feeling make him refer this proposition to his friends and relatives?

Every savings account in the country with idle balances lying in it, represents an opportunity that our industry has, but is not tapping. People in our industry talk about Jan-Dhan kind of mass retail programs to enhance retail penetration. Isn't opening a Contingency Fund account a good way to get every tax paying retail saver to start engaging with our industry?

If this idea makes sense, why don't we have at least 10 AMCs actively marketing Contingency Funds? Why can't we have one to start with?

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