There have been 3 drivers of
business mobilisation for Mutual Fund in
India - brokerage ,performance and
value add .
Now with AMFI putting cap of max 1 % on upfront brokerage and trail
calculation on a defined formula i.e making a consistent percentage every year based
on total expense ratio, chances of
differential payout is now less until unless AMC wants to circumvent the AMFI guideline
. So again scope of creating a differentiating factor on brokerage front for AMCs
is now almost over .
Performance can be variable . Past
performance can be taken as yardstick for consistency or volatility but cannot be
taken as benchmark for future return . A
fund can not be a top performer always nor do all the funds of the same AMC be the
best performers. Creating a positive
differentiating factors on basis of historical performance may not be always
easy for an AMC and moreover performance is not always in AMCs control .
Now the only driver where an AMC
can structure and strategise for big positive differentiator for business
mobilisation is Value Adds . With brokerage shrinking , performance being market
driven , client ‘s long term loyalty a major influencer for business sustenance
, growing competition (from non risky traditional products , tangible assets
and Insurance products ) there has to be enough motivation for distributor for
selling MF products . This is where AMCs role comes in big way .
The most important Value Add
could be Training , skill enhancement , competency development activities given
to distributors . Client management challenges , beating the competition , earning
the long term loyalty of clients , growing sustainable revenue all these can be
resolved through a structured and focussed training activities which AMC should
be taking . In fact my belief is one way of judging the seriousness of an AMC
playing its role for industry growth is evaluating their training activities
both from qualitative and quantitative perspective .
I think it is a very good
opportunity for each AMC to create a value added differentiating factor . We
talk of relationship , bonding with distributors but the underlying reason now for these are
who helps most in developing the sustainable growing business model.
Investment Advisory regulation
has been brought almost 2 years back by SEBI but how many AMCs have really
structured their training activities to create Investment Advisors? Why SEBI is
not having some incentive for those AMCs who are using the resources meticulously
on Training and creation of Investment Advisors . Unfortunately training for
most in the business is of least priority as evident from the nos of resources put
in force but now that should be something AMCs should be seriously looking to
create a competitive edge over others and create a differentiating factor .
