Advisor Speak

26th March 2012

Retail penetration : moving from dream to reality
Wealth Forum Panel Discussion


There is no point in sitting back in frustration and doing nothing as we watch investors exiting mutual funds. There is no point in waiting for markets to turn the tide by turning bullish or waiting for regulators or the Government to turn the tide by offering tax and other sops. The dream of retail penetration can become a reality if each advisor does his or her own bit in their respective spheres of influence - just as these five advisors have done. Its about understanding what to pitch, how to pitch and when to pitch - that's the key to making mutual funds more relevant to the average Indian saver.

Panellists (from Left to Right) : Hari Kamat, Goa ; Anindya Mandal, Ruby Financial, Kolkata; Ramesh Bhat, Aniram, Chennai; Navin Tewari, Birla Sun Life AMC; Ashish Goel, Vista Wealth, Delhi; Sadashiv Phene, Mumbai; Vijay Venkatram, Wealth Forum

The recently concluded Wealth Forum Platinum Circle Advisors Conference, held on 23rd March 2012, featured a panel discussion titled "Retail penetration : moving from dream to reality".

Opening the session, Vijay Venkatram, Director, Wealth Forum remarked that for far too long, we have been talking about the vast untapped retail potential - and it has remained as potential and not yet been translated into reality because we have not yet figured out how to make mutual funds relevant to the average Indian saver. It is pointless, he said, to wait for somebody to wave a magic wand to drive retail penetration and make mutual funds more relevant for the average retail Indian saver. It is pointless for us to wait for tax sops and other regulatory intervention. Its time for us to each take our own little steps in making mutual funds more relevant in the lives of our own clients, friends and associates. It is with this spirit that this panel was set up - each of the 5 advisors on the panel has done a remarkable job in making mutual funds relevant to normally risk averse Indian savers in their own respective markets. The panel discussion's objective was to share best practices and learn from each other, so that all the assembled Platinum Circle advisors could take some thoughts back on ideas they could implement in their own markets, in their own circles of influence.

Navin Tewari led the discussions with a thought provoking presentation on the vital aspect of on-boarding of new investors - where have we gone wrong and how we should make changes in our approach (see


Anindya Mandal talked about the practical issues of mobilising feet-on-street in smaller towns around Kolkata. There are a number of women agents who sell recurring deposits to small investors in these areas, who wouldn't mind adding SIPs into their product portfolio. But, look at what they need to go through before they can sell their first SIP. They need to pass the NISM certification - which itself is a herculean task for them. Then they are supposed to pay the AMFI fees of Rs. 5000 to qualify as an ARN holder and sell SIPs. Nobody is interested in taking so much pain, when selling RDs is so much simpler and so much more remunerative. Anindya said the time has come for the industry to think of how to create a new cadre of salespersons called SIP agents. They must have a much lower level of certification requirement and a much lower level of AMFI fees. They must be permitted to sell only SIPs. If the industry wants meaningful retail penetration beyond the metros, it has to find ways of competing with bank recurring deposits - and having a cadre of SIP agents is one way forward.


Ramesh Bhat agreed that the SIP agent idea sounds exciting, but cautioned that its practical implementation is not so simple. How will you ensure for example that the SIP agent does not in fact sell any other product, he asked. He said that the idea needs to be discussed and debated at length to iron out flaws and see how we can make it practical. The concept of a lower threshold for certification and AMFI fees, he believes is very important for increasing the number of small agents who can penetrate deeper into rural areas.

When commenting on what lies within our own control, Ramesh agreed fully with Navin's comments on onboarding of customers (see and gave his own examples of how he is using liquid funds with the debit card facility and the SMS Invest facility in liquid funds to get investors to park savings into liquid funds. He took the example of a client who routinely hands over Rs. 25,000 per month on the 1st of every month to his wife for monthly expenses. By getting his client to put that money into a liquid fund and giving him and his wife a debit card, he has ensured that even the monthly expenses budget earns some return, without compromising in any way on liquidity. Similarly, he is encouraging his clients to use the SMS Invest facility to transfer idle surpluses from savings accounts to liquid funds, and earn higher yields. These are simple ways you can get every client of yours into the world of mutual funds, he said.


Sadashiv Phene observed that in the retail world, we need to focus less on risk profiling and more on building confidence of investors. Risk profiling for the average Indian saver is a pointless exercise, he observed. They are anyway very risk averse and at the slightest sight of losses, they exit and run for safety. Rather than spending time on risk profiling for retail investors, as SEBI has now mandated, our job is to keep reiterating to our clients the perils of having an FD only portfolio, in terms of losing the fight against inflation. We must understand that despite your best efforts, probably only 30-40% of the client's portfolio will come to you for avenues beyond fixed deposits.

In the retail world, very often you get to know about the client's full portfolio only at the time of purchase of some property. It is only when you are discussing how to fund the initial down payment, that you discover all the deposits that have been tucked away over the years.


Hari Kamat explained how he sets up self-financing SIPs for his customers, by withdrawing the interest earned on fixed income generating instruments (PPF, deposits etc) and setting up SIPs from that income. Only a handful of advisors in the conference had attempted this strategy before, but most agreed that it is a great strategy, which they would look at implementing, going forward.

Another point that he made was the need to get clients to buy children's plans. Right from the time the child is born, there are so many occasions where the child is gifted some money. All of this is just frittered away by the parents. Hari has started making young parents aware, the moment a child is born, that they should put away all of this into the child's fund. By setting up a child plan soon after birth, he ensures that the savings journey begins at the earliest level and all amounts - small and large - go into the child plan that he has set up. Saving for children through mutual funds and insurance should begin right from the time the new born gets its first set of monetary gifts at its naming ceremony.


Ashish Goel took the conference participants through an idea which he and a few other DFDA colleagues are piloting and are keen to promote vigourously. He talked about the big opportunity of tapping first time salary earners through focussed worksite education initiatives (see
). Navin Tewari observed that one needs to be careful in ensuring that the initiative genuinely focusses on education and not on a product pitch. Many large organisations, he said, have become wary of worksite marketing initiatives as they often degenerate very quickly into product pitches - which is not appreciated either by the staff or the management. A special effort needs to be taken for such an initiative to be purely education focussed, and be seen by staff and company management as such.

Vijay thanked the panellists for their valuable insights. Each panellist had spoken about what they are doing in their own way to achieve higher levels of retail penetration. Each has valuable ideas which can be taken on board by advisors across India and implemented in their own markets. A collective effort by each advisor, doing his or her own bit, without waiting for the regulator or the MF industry to do anything special - is what is needed to actually grow this industry and make mutual funds more relevant to the average Indian saver.