a higher expense compared to a large investment .
But the writing is on the wall and even traditional distributors are now responding to the change in customer behaviour . NJ India Invest — one of India ’ s largest mutual fund distributors that manages assets worth nearly `50,000 crore — is also transforming itself . NJ India Invest has completely gone paperless and now helps investors invest through its platform . But this is assisted investing where a distributor is associated with every transaction . Says Neeraj Choksi , co-founder of NJ Invest , “ We have an electronic platform through which customers can buy multiple schemes . On the platform also there is a physical intermediary who helps the customer choose funds . We have 25,000 distributors on our platform and they acquire customers . The on-boarding process is electronic . Our intermediary can generate a link and through that the customer can make a payment .”
But over time , distributors will have to significantly add value if they want to retain customers ,
Sundeep Sikka
Executive Director & CEO , Reliance Nippon Life Asset Management
The market is going to evolve . Right now , 2 per cent of India invests in mutual funds . It is important to understand that multiple distribution models will exist
Interview
Paul Smith
CEO and President , CFA Institute
‘ There ’ s room for all kinds of distribution models ’
SEBI ’ s proposal to segregate investment advisory and mutual fund distribution will usher in transparency in the market , says Paul Smith
How do you view SEBI ’ s proposal to segregate investment advisory and mutual fund distribution ? The underlying purpose of the move is to make retail investors aware that the person who is selling them the product has an angle and what that angle is . It will force transparency on the market by separating these two things . I am not prepared to say whether the move is good or bad , but I am prepared to say that the industry needs to respond more constructively and work with the regulator to offer proper solutions .
What are the advantages of going direct ? Will newage models dent the existing distribution businesses ?
Lower charges apart , the advantages are subliminal . It is an educational process — you are forcing yourself to do research . A lot of people use the internet to crosscheck as they want independent sources of information . But I think there is scope for human intervention . There is complexity in financial products . How much time can you put in running your own financial affairs ? You always need an external voice to correct your biases . It is a mistake to think there is one perfect solution . In a sophisticated society , there is room for all kinds of models , but no room for lack of transparency and that is what we have to get over .
Will technology displace distributors ? It is the most tremendously positive thing to have occurred in my lifetime . It enables more creative products to be manufactured , more tailoring as per needs and mass distribution . I don ’ t see it as a replacement — I don ’ t believe that humans are finished . It is a wonderful tool to help humans do better . Technology will extend the reach of financial services and penetration .
www . outlookmoney . com February 2018 Outlook Money 55