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A new, inclusive IFA loyalty program

Sandeep Sharma, SVP & National Head - Retail Sales & Distribution Alliances, SBI MF

10th April 2017

In a nutshell

SBI MF's new distributor loyalty program doesn't just recognize and reward large IFAs - it makes a sincere attempt at rewarding SIP focused IFAs who may not feature high in the AuM league tables, and also new IFAs who get left out of most loyalty programs. Sandeep takes us through the contours of SBI MF's loyalty program as well as the array of engagement initiatives that SBI MF has launched in recent times to deepen IFA engagement.

WF: What prompted you to launch a loyalty program and why now?

Sandeep: Honestly, we have been contemplating launching this program for some time now. But, each time we considered a launch, there was some regulatory development which in a way diverted distributor focus from business to impact of regulations. Obviously, launching such a program amidst uncertainty would not have been wise. Now that attention is clearly focused on business development, we feel this is a good time to launch this program.

While the industry is doing a lot to support large IFAs, I believe there is a need to recognise and support growth focused IFAs from smaller locations, so that they too can aspire to participate fully in the growth wave that the industry finds itself in. Our program therefore focuses on both - the large IFAs as well as IFAs from smaller B-15 locations.

We are going through a phase where retail participation in mutual funds is growing very rapidly, but the distribution force - particularly IFAs - is not growing in tandem. The need of the hour is to support and encourage growth in distribution, and I believe our loyalty program is a small effort in this direction.

WF: What would you say are the key differentiators of your loyalty program?

Sandeep: Disruption is the norm today in every business, and the distribution business is also witnessing its share of disruption. You can either ride the disruption wave and build strong, scalable businesses, or become a victim of disruption. The central focus of our loyalty program is to offer specific, high quality training intervention, in conjunction with reputed management institutions, to enable qualifying IFAs to harness disruption and build scalable businesses. Obviously, one specific disruptive force is technology - and therefore our aim will be to focus on quality training initiatives that help IFAs understand and implement tech-enabled processes to drive business growth.

Another very important feature of our loyalty program is our Partnership Plan. This is an effort by us to help IFAs save up for their retirement. IFAs can contribute anywhere between 5% to 100% of their net brokerage with us into the Partnership Plan which gets invested in select schemes of SBI MF. We will add another 5% of net brokerage as our contribution into the Partnership Plan to boost their long term savings, and encourage them to put aside money for their golden years.

A third differentiation is the inclusive nature of this program - it is not meant only for the big IFAs - it has been designed in a manner that caters to big IFAs, retail IFAs who focus on SIPs and also new IFAs who often get left out of loyalty programs.

WF: In what ways does your loyalty program align with your objective of promoting right selling?

Sandeep: Just as we tell investors that time in the market is their key to wealth creation, so is the case for distributors too. Longevity of assets is key to creating long term wealth for distributors through a trail commission. Towards this end, our loyalty program focuses only on parameters which promote longevity of assets - ie, AuM and net sales. Net sales earns loyalty points and not gross sales. Similarly, loyalty points are earned on existing AuM as well, and not just on sales. Retention of assets is as important as fresh business, for an IFA to grow his business appreciably - and that is what we recognise in this loyalty program.

WF: How does the SIP booster work?

Sandeep: The SIP culture is fast catching up and all of us need to do our bit to give it further momentum. Our own SIP book at SBI MF has grown from Rs.250 cr per month in March 2016 to over Rs.450 cr per month by Feb 2017. There are many IFAs who are focusing almost exclusively on building their SIP books. They may not see as rapid a scale up in initial years in their AuM, but they are building a very strong and stable base for sustained growth in the long term. Such IFAs would typically lose out if the only criteria are net sales and AuM. In order to ensure that we recognize their efforts appropriately, we have introduced the SIP booster.

So, if an IFA gives us at least 2 SIPs of at least Rs.2,000 each for at least 36 months duration, we will assign him one additional club point. Just to put this in perspective, an equity AuM of Rs. 10 lakhs earns 1 club point and Rs. 1 lakh net sales of equity funds also earns 1 club point. So you can see that we are giving very meaningful recognition for SIPs through our SIP booster plan.

WF: How does your Gross Sales Multiplier work and what is its relevance?

Sandeep: This is meant to include into the program new IFAs who typically get left out of most loyalty programs. A new IFA who is building his business won't have a large AuM and thus would automatically get left out. But, we don't want that to happen. So what we have introduced is the Gross Sales Multiplier - which kicks in for IFAs who give us more than 10% market share in their gross sales (other than liquid funds). So, if an IFA has given us 20% share in his gross sales in category I and II funds (equity oriented and debt oriented - does not include ultra short term), then we give a 1.2 multiplier on his net sales points. If he had accumulated 50 net sales points, with the 1.2 multiplier, it will go up to 60 net sales points. This is a way of recognizing and rewarding IFAs who choose to grow with us as a material part of their growth plans, and will especially benefit new IFAs who repose their faith in us.

WF: How many IFAs do you expect to enrol into your Elite, Platinum, Gold and Silver programs at launch?

Sandeep: I think we will have around 1500 IFAs enrolled in April 2017. I would expect about 50% of them to be in the Silver program with the other 50% being spread over the three higher segments.

WF: Providing technology solutions to IFAs seems to be one of the key value adds that large fund houses are focusing on. Do you have any such plans for your IFA partners?

Sandeep: We are making ourselves digitally ready. We have revamped our distributor portal and distributor app, with features that enable distributor initiated transactions and high quality MI on their business with us. Going forward, loyalty program points will also get updated periodically on the distributor portal. Our app gives a facility for a distributor to request for participation in fund manager calls. Our distributor portal offers a wide range of co-branded marketing material that distributors can use.

You may recall, we were the first in the industry to launch a scheme specific app which makes it very convenient to park short term savings in SBI Savings Fund. In short, enabling our distributors through tech driven initiatives is an ongoing priority for us at SBI MF, and we will continue our efforts to keep enhancing the way we digitally enable our IFAs.

WF: Beyond this loyalty program, are there any other forms of IFA engagement initiatives that you have lined up for this financial year?

Sandeep: There have been a number of engagement initiatives we have introduced in the last couple of years, and we intend to continue building on them. We have our Confluence programs - which are 2 day zonal conferences for top IFAs in each of the 4 zones. Our investment management team, top management team and sales teams are present at these events, where we engage meaningfully with top IFAs of respective zones.

Last year, we launched a platform called Perspectives - which is a series of programs where perspectives are shared by experts on topical matters which are relevant for advisors and distributors. We typically do 3-4 roadshows in different parts of the country. Recently, we invited the Global Economist of Amundi - our JV partner - to share his insights on the global economy.

Then we have the quarterly Nivesh Ki Baat audio and video program, where our investment management team discusses markets and strategies with distributors who can log on via audio call or can join into one of our 50 centres across the country which are connected to head office through video link.Nivesh Ki baat also goes live on our facebook page.

Recently we launched Decode, a podcast series which are specific fund focused talks with the fund manager. Insights on fund positioning and strategy of individual funds are shared in this podcast. This has also been well received by the distribution community.

Our efforts towards deepening our distributor engagement will continue and the loyalty program - with its inclusive nature, is another step in reaffirming our commitment to our distributors in growing together.

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