Reliance Nippon MF builds office for distributors
Fund house plans to offer 10 such spaces by June
At a time when India’s burgeoning mutual fund sector has re-conquered its lost distributor base in recent years, the industry is trying various measures to hand-hold foot soldiers to further the penetration of mutual funds.
WIth client acquisition costs on the rise and providing services to clients being the priority, various digital and technology upgrades from several fund houses to assist distributors have gained momentum in recent times. Amid this, Reliance Nippon Life Mutual Fund, the country's third largest fund house, is providing office space for distributors.
Last month, the fund house began offering distributors office space as part of a pilot project in Borivali, a western suburb of Mumbai. Branded ‘Prosperity Hub’, this station provides working space to distributors to conduct their business and client meetings. This initiative is in line with the 'Life Plaza' concept that Nippon Life has in several cities where insurance agents can conduct their businesses. The office comes powered with computer systems, phone calling, wifi internet facilities, printers, photo-copiers, meeting rooms and cubicles that are necessary for a functional office.
The facilities provided do not come with any costs and any active mutual fund distributor can use them for business. Moreover, the facility is not restricted only for distributors of Reliance Nippon products. Any distributor with a valid Amfi registration number (ARN) can use the space, irrespective of the fund house he or she is empanelled with.
This initiative could not come have come at a better time when several new distributors have joined the industry and are in the process of establishing their business. For the majority, it may not be possible to set up their own offices to conduct client meetings given the costs involved. Further, such an initiative is likely to inculcate professionalism among distributors.
Sundeep Sikka, chief executive officer (CEO) of Reliance Nippon Life MF, says, "Mutual fund distributors are the backbone of our industry. Without them, penetration of mutual fund products can not be enhanced. The last few weeks of operating our first Prosperity Hub have provided positive feedback and we have plans to replicate this in other cities and towns soon. But our main focus will remain on smaller cities and towns as distributors in those regions need a lot of infrastructure support."
Reliance Nippon Life MF plans to open 10 more such offices by June next year. Initially, half of them will be in big cities like Delhi, Bengaluru, Chennai and Kolkata. The other half will be in relatively smaller cities like Nagpur, Lucknow and Ahmedabad, among others.
“Depending on our experience we will not hesitate to go deeper with this concept. Our idea is to help distributors grow the overall industry. If the sector grows it is needless to say that we will also grow,” adds Sikka.
However, such initiatives do come with a cost. Though the fund house did not disclose the cost involved, it said it would not be taken out of the fund meant for investors' awareness programmes. “The costs for this initiative will be part of our balance sheet,” Sikka clarified.
Other big fund houses Business Standard spoke to appreciated the move. However, as of now they have no plans to follow the initiative. Mos fund houses said they were focusing more on technological upgrades to assist distributors in on-boarding investors faster.
India has 100,000 mutual fund distributors. Industry sources say informed individuals are joining the industry as distributors, which will help the sector reach new heights.