[0:11]Good morning, Namaskaram. Vannakam. So today I'll speak as not as a founder of an AMC. I'll speak if I was a mutual fund distributor, if I was an RIA. What I would do to increase my business 10x? Ready for it? And I need participation, okay? Thank you so much. So today let us look at some of the problems in our industry. And before we look at problems, we must know the fact that if we understand a problem well, it is 50% solved. So are you ready to solve your problem 50% right now? So let's see some of the problems which has chased us in the last few years. We were IFAs, we were financial advisors. We were degraded to what? Distributors, yes. GST reforms where most mis-selling happens, their problems are being solved. And where the entire work economy growth, or for financial inclusion, making this investors savers to investment, the work with all our partners or MFDs are doing. Is our problem solved? Next, direct whether it is institution direct or it is direct retail investors. This is surging every year and there's and the number today is more than 50%, increasing at an alarming rate. And if this increases like this by the next 10 years, this number will increase to more than 75%. Yes or no? So what and what is the next thing? This is again, we all, you know, we we handle it for from our competition. So why this has happened?
[2:07]One of the most important reason this has happened and this has to open your eyes. Before 24, right? Till 24, markets were increasing at tremendous speed. Even even we were not chasing our clients, our AUM was increasing. Yes or no? So we all became very what? Complacent. We all became very complacent that business is like this only, business will keep increasing like this. But then last 18 months, business is not increasing like this. Yes? Which is where we thought that this is now the time to go back to basics and understand what we can do to ensure that our business keeps growing, our investors don't leave us and we are able to retain our clients. So it is very easy to blame. Most partners tell me Madhu, it's AMC's fault. People tell me it is Amfi's fault. People tell me it's SEBI's fault. So whose fault is this? Whose fault? Yeah, can you be a please louder? Our fault. It is, it is who? I'm a distributor now, so it is our fault. Under our, you know, under our regime, under our all the hard work being done by us, tell still all these five, six points which I have noted down has happened and this is hampering our business and this will hamper our business at a tremendous speed. But let me tell you, there's a great solution to it and if I talk about some numbers, in India, so so let's talk about US first. Right? We must learn from developed countries. In US, the distribution business was there 20 years back. In the last 15-20 years, the RIAs has taken over. There are more than 2 lakh RIAs there. There are there are lakhs of CFPs there. Right? So what has happened? Distribution commission business was there, but they all have now shifted to RIAs. Now US is a different economy. US has second, third generation investors. Do India has second generation investors? India mostly has first generation investors, which is why we are so cost conscious. Yes? But by 2040, let me give you the data, by 2040, 40% investors would come from the second generation investors who will not mind paying. So which is when the RIAs would take over the way they have taken over in US. Second data is, all these second gen investors, right? The money they are getting from their parents, 66% of them don't like old mutual fund distributors. So we need to in we have time, we need to ramp our ramp up our practice and we need to become a passionate entrepreneur. We need to move away from accidental MFD. We were accidental MFD, we were doing some other things, now we have come into mutual fund distribution. But now is the time, we need to think, act and behave like a entrepreneur. Behave like what? You all are entrepreneurs now, but the only problem is we need to think, behave and act like entrepreneurs and first thing you can do is you can change. So we know we must learn from we have Padmanaban here, we have Ramesh sir here. We don't you need to learn from them. How they do it? If you go to if you see their cards, business cards, they have a logo, they have their own brand, right? Under Mr. Ramesh, he will write, I am the founder. AMFI registered mutual fund distributor comes behind, right, at the last. So our card should carry our identity. We are the biggest brand. Yes or no? AMCs are dependent on you, you are not dependent on AMCs. Yes or no?
[6:07]So first thing we would do when we go home, go back office today, change our cards, have a proper logo. Under your name, write a founder, write a director or write a MD. So this is how, from the left side image you can see, from become from an accidental MFD, we need to behave like a entrepreneur. Next point, do I need to explain this? Shall I explain? I have visited many offices in the country. I've done, I've already visited 100 plus cities in the last six months. And it is really painful is to see why we are called as agents. Do you know why we are called as agents? Why the clients have problem in paying us commission? Why the clients question us, that commission kyu le raha hai? Do you know what is the problem is? It all has to do with the mind. The moment you display all the brands, be it my own brand, do the moment you display brands, AMC brands in your offices. What happens? The client sees you as what? Agent. Yes or no? If you go to large distributors, they never display AMC brands. They display their own brand. So if Madhu Lunawat was a mutual fund distributor, she would have displayed her own W logo, her even pen stand comes with wealth logo. Yes or no? Not AMC logos. So today, the next, second point we will do when we go back to our offices, take a big dustbin and throw away all the items you have received as gifts from AMCs. Clear?
[8:14]Third most important point. We need to stop selling performance. Let me tell you, data shows, every data show clients doesn't know performance, they don't need to know performance. It is our problem because what AMCs are doing, we are giving you all technical sessions. Yes or no? Market yahan jayega, kal jayega, ye band karo, ye chalu karo. Client doesn't need to know, client needs to know goal planning. Client needs to know asset allocation. He was happy with his FD income. Yes or no? But how do you sell? Most of you, cross your heart and see you sell, sir, mutual fund gives 18% return. 15% to minimum aayega. Enna panniningre. So we need to sell only goal. We need to sell their Itchay, like SIPs. We need to sell asset allocation. We need not sell past performance or future performance to their clients. The moment you stop this, the client will never question the how the market has gone down or why my scheme is not performed because you are selling long term here. Next, 80% 80 to 85% of individual mutual fund distributors don't do justice to the clients portfolio. Yes or no? We talk of asset allocation, but when it comes to asset allocation of our own business. We are completely lop-sided to mutual funds. Clients needs SIPs, Mr. Naren just spoke about it. Client needs AIF, client may need PMS, client may need global investing. Yes or no? Who is going to provide? If you don't provide, your competitor will provide. And if they provide, they'll take away all the penny relationships you are proud of. So I'll talk about penny relationships for, see, iska photo lijiye aap. This is what 80% 80 to 90% of us are doing. We are busy, we are entrepreneurs. We are busy chasing small clients. Small clients are to be chased, but by your team, provided you have a team. Have a sales team, they need to chase small clients. You need to focus on HNIs. Yes or no? HNIs don't question your commissions. They question they only ask the value addition you have done to their portfolios. And we all know the kind of value addition you have been doing for last so many years. Right? Next, professionalism gap. Again, this is this is applicable for smaller MFDs and which is where I would request all the larger ones, right, to contribute. See, because we have to survive as an industry. Don't think it is not applicable to me, madam, I will not do it. No, it may not be applicable to you, but it is applicable to other smaller players. And being a prominent player, it is your responsibility, it is association's responsibility to handhold all of them. So what we need to do? Stop coffee shop meetings. Call clients to your office. Show your brand, show your value addition. Right? Once you do that, the client don't question your commissions. This we already spoke about. This again the favorite point. Most mutual fund distributors, you'll find them where? Where? AMC offices. Why? Again, inna panniningre. You have to be where your clients are. From tomorrow, please don't go to any technical meetings. If you want to know anything, ask the AMC to arrange webinar or a web call. Don't waste waste their time. Don't waste your precious time. As I told you in the beginning, next five years are very important to each and every one of us. We need to grow our business 10x so that when the shift comes, we are ready, we are already grown up. Yes? So for that, what you have to do? You have to be present where your clients are. And not sit in AMC boardrooms. These are some of the measures which I as a business follow. What do I follow? So I always check net new assets. I don't check what the market has done for me. That is bonus. But what new clients I have added to my portfolio, right? Second, closing ratio. Again, there's a big problem here. Go to any manufacturing house. You have you gone to any manufacturing plant? Please go and visit. You see there, you see wahan pe raw material enters, right? On the conveyor and everything happens and the finished product comes out, probably three shifts a day. In our case, what we are selling is our time. Time is very precious. Don't take it very easily. Madhu aaj nahi, what happens if not today, I'll do it tomorrow. I'll do it next year, I'll do next after year. Time doesn't come. Yes or no? So what we need to do? Focus on closing ratio. My closing ratio is 90%, if I meet 10 clients, I close nine of them. You need to ensure your closing ratio also improves. Third point, revenue per client. At your level you are an entrepreneur, I only chase the larger ones. Yes? The smaller ones, the referral ones, even they can be taken care by the team. Fourth point, activity volume. If you have 10 hours working hours per day, the entire 10 hours have to go towards what? Sales or what? Only and only sales. The most important point, if you want to grow your business, check your list every day whether you are spending 90% plus of your time in sales or you are chasing compliances or you are doing servicing.
[17:10]Those, please build a team. We have 145 plus crore population, they all need jobs also. Please do that. Next, very important point. We have become so intellectual. We are busy debating schemes. Fund managers have become sales person and MFDs have become fund managers. So can we stop doing that? And focus on our business, just ensure where your client is, go to your client and address his needs, right? Next, these are some of the myths I'd like to break. Clients don't leave mutual fund because of returns. It is the biggest myth. Client leave mutual fund because their emotions were not managed. Your role was to manage emotions, we did not manage it. We blame the AMCs for it. Yes, let AMC manage the returns, your your job is to your job is to manage emotions. Please do just to justice to that. Next, people always ask me, Madhu, what about technology? Technology is your biggest friend, but if your role is only order taking, if your role is only execution, technology is going to replace you. So what we need to do? We need to, as I said earlier, guide behavior, goal planning and other things asset allocation, we need to focus on. If you do these things, your you will become irreplaceable. You will become irreplaceable. There's no threat from direct platform. Only threat is our own mindset. Yes? So I'll speak about mindset in a bit. Then, this is the biggest myth again, from the larger ones also. Madhu, let the direct platform come. What will happen? The clients mereko chhod ke nahi jayega. Yes or no? What is your view? Client will definitely come back once he is pissed off with the direct platform. Once he feels that your emotions is not managed, I need a human person, client will definitely come. But let me tell you, 90% of us are not ready for those kind of clients. Client will go to Ramesh sir. Client may go to him, client may go to Padmanaban. Those who have already built their practices here. Yes or no? So you need to build your practices if you want, if you are in under that myth that direct clients who are going away, they will come to me. They will only come when you are at par with them.
