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Working with this distributor was an enlightening experience for our fund house

Saurabh Jain, National Head Sales & Marketing, Union AMC

18th November 2016

In a nutshell

The initial years that Union AMC spent working closely with Union Bank of India was a new and enlightening experience for the fund house, says Saurabh, as they went deeper into non metro markets and created thousands of first time MF investors. The extent of the untapped market opportunity for the industry could not have hit home more clearly. Interacting with these first time investors also gave the fund house rich perspectives on creating the right product for the right investor at the right time - insights which will stand them in good stead as Union AMC's team reaches out to expand its IFA distribution base. Saurabh believes that the debate on technology vs distributors is misplaced - they are not mutually exclusive. Technology that is intelligently harnessed by distributors is the way forward for driving intermediation in the coming years.

WF: Your fund house has worked very closely with Union Bank since inception in distributing your funds and in particular, in approaching first time investors. What have been some of your biggest learnings from this exercise?

Saurabh: Working with Union Bank of India as a distributor has been an altogether new and enlightening experience for us. A bank with a large branch network panning across the country with millions of bank account holders, has been an ideal launch platform for the AMC. The bank has made us realise that the potential market place for Mutual Fund sales is huge and unexplored in places other than the top eight cities in India. From the bank's extensive customer base, we were able to garner a large number of first time mutual fund investors which helped us to build a stable retail client base. We conducted product feedback sessions with the distribution team of the bank before launching products. It helped us to identify the right product for clients. We also realised that interaction with investors with strong support from the bank improved our customer conversion ratio. These learnings and insights will definitely help us in future to expand our distribution base.

WF: You have now started actively reaching out to independent distributors in an effort to broad-base distribution. Why now and what are your plans in terms of distribution coverage?

Saurabh: In the initial phase, the focus was to build a strong distribution base through Union Bank branch network. We conducted trainings to create awareness in the network along with focussed drive on Investor Awareness Programs (IAPs). The Sales team structure was aligned accordingly.

While Union Bank distribution now is running successfully on an autopilot mode, we are trying to expand the distribution network. We are keen to step up our engagement with the Independent Financial Advisors (IFAs) community. We have empanelled a significant number of IFAs this calendar year across locations and shall be engaging with them more actively. We shall be focusing on increasing the ease of investing in our funds which should help the distribution fraternity to improve their efficiency in handling more and more investors.

WF: How do you differentiate your fund house and your products in an attempt to win distributor mindshare in a competitive market?

Saurabh: As money managers we believe our fiduciary responsibility is to safeguard our investor's interest. We offer true to label products. Also, whenever the opportunity arises we try to launch differentiated products. We launched the Trigger Fund which was widely recognised as a significant innovation in the industry.

Also, we will not be launching New Fund Offers (NFOs) just to have more products. Our products will have clear positioning in the market.

WF: What are the key messages you take to distributors about your fund house's philosophy?

Saurabh: Our philosophy is to provide the right product to the right client at the right time. We want to be known for our knowledge-based customized approach that helps us offer the right financial solutions to our customers by understanding their needs better. We want to promote an investment culture that believes in long term, systematic wealth creation.

WF: What are your product plans over the next 12 months? What are your plans to enhance distribution coverage over the next 12 months?

Saurabh: Going forward, we will be aim to complete our product basket. Systematic Investment Plan (SIP) will be a key focus area. We strongly believe in the concept of linking an SIP with a goal, and accordingly, we have rebranded SIP as Strategic Investment Plan (SIP), Home Investment Plan (HIP) and Education Investment plan (EIP). SIP as a product suffers from high premature closure ratio since many investors tend to discontinue their SIP when the markets turn bad. By giving a tangible target and an emotional connect, we expect that over a period of time there will be longer tenure SIPs with lower premature ratio.

We will continue to increase our reach by empanelling more IFAs across the country with more emphasis on tier II and tier III cities. In addition to regular interaction we will be focusing on developing effective marketing materials and tools that would help them distribute Mutual Fund products more efficiently.

WF: You have worked closely with independent distributors in your previous assignments as well. What strikes you as the key strengths that they have which they should build on and what are the key weaknesses they must work on, in order to successfully navigate a challenging regulatory environment?

Saurabh: Independent Distributors are one of the most critical part of the distribution channel. They have a reach across India and they carry a strong relationship with clients. In the past two to three years interesting models have evolved among independent distributors where some of them are focussing on SIPs to grow the business. There is also increased focus on goal based investments.

As an industry, we need more independent advisors. However, technology has changed drastically in the last 3 years. I believe independent distributors should embrace technology as it reduces cost and increases the ease of transaction for investors.

WF: How do you see mutual fund intermediation evolving over the next 5 years? What spaces do you see being occupied by direct, by robo advisors, by e commerce platforms, by Registered Investment Advisors (RIAs), by banks and by independent distributors, 5 years from today?

Saurabh: Independent Distributors, RIAs and banks will all continue to play an important role in mutual fund intermediation. My view is that relationship is important while transacting in financial products, as in turbulent times clients need to be hand held and guided through.

Emphasis should be given on strengthening the distribution network using technology, as investment in mutual fund still needs a push. There is a felt need to expand the distribution network if we have to successfully reach out to investors in smaller towns. It would not be appropriate to view technology and distributors as mutually exclusive. Technology will be used for improving the effectiveness of the distribution network and for increasing the ease of investing. Technology alone cannot replace the role of an advisor. The right combination would be a good advisor with access to the best that technology can offer.

The views expressed or statements made in this document are purely the views of the author and do not necessarily represent the views of either the Company or its affiliates. The views expressed or statements made in this document are as of November 2016, and can change without any notice.


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