Developing an outside-in perspective

Ravi Menon is the chief executive officer at HSBC Mutual Fund. He shares three tips to help advisers succeed in their business.
By Guest |  04-04-17 | 
No Image
About the Author
Morningstar invites thought leaders from the investment community to share their insights. Views expressed are personal and should not be construed as investment advice.

As we talk of advisory, the first thing that comes to our mind is, what does the investor want? What are his financial needs?

The moment we start finding answers to these questions, we realise that the mutual fund industry needs to have an ‘outside-in’ perspective as compared to an ‘inside-out’ perspective. Understanding investors’ needs should come first, followed by a product & service channel alignment.

While a number of change agents like technology and investment in B-15 cities and investor education would be required to help ensure the overall objective of prudent growth and profitability, the role of an investment adviser is of tantamount importance to support the outside-in perspective. The future potential of investment advisers could be decided by Investors and the regulators. Presence of an unbiased adviser could build investor trust on the one hand and reward performing products on the other. These measures should help the industry on the path to better growth. However, we need all stakeholders viz., asset management companies, distributors and regulators to work together to help ensure the common goal of growth along with profitability is achieved.

Value proposition

India is still a relatively under penetrated market when it comes to paying for financial advice. Most investors are not comfortable paying a fee when it comes to receiving financial advice and even more so in years where the market sees greater volatility and when there may be potential losses on investments. HNIs with the knowledge and wherewithal to appoint someone to manage their finances do pay for advice. However, in the mass affluent segment, paying for advice still remains a relatively nascent concept. This will take its time. If the investment advisers stick to outside-in perspective keeping the customers’ interest at the forefront the customer will see value in the advice and won’t mind paying an appropriate ‘advice fee’.

The key differentiators within the distribution part of the value chain will increasingly be the adviser-client relationship and the personalized advisory process itself, probably more than the actions and performance of the recommended funds. True advisers, will focus on how to make themselves relevant and add value to the production chain well above and beyond simply providing office space and trade execution services to their clients. The potential for value creation in the client-adviser relationship can be clearly seen by looking at recent trends in profitability margins. Costs are rising and margins are shrinking throughout most of the global financial services industry, particularly within asset management manufacturing. However, when drilling down to the product-specific level, margins have actually grown in wealth management, specifically in the client-facing advisory segment. Advisers can and will be able to sustain pricing power due to their tight ownership of the client relationship and the client perception that they are actually getting value for money.

Investing in CRM

Fund houses should invest in Customer Relationship Management (CRM) systems not just to track investor relationships, but to also engage with channel partners in a more meaningful and differentiated manner. Enabling the sales force and channel partners with relevant and actionable insights to manage day-to-day activities and sell better to their investors will lead to an increase in the distributor’s business with the respective fund house.

With the increasing adoption of smartphones and other mobile devices, the mobile platform has become the de-facto platform of choice. The availability of various types of devices (such as phablets and devices with large screens) coupled with the increased penetration of mobile data networks translate to an enhanced experience. Usage of mobile and social platforms will be crucial in engaging effectively with the distributor community and building a mobile point-of-sale.

Extending the same philosophy to tech-savvy end investors will help build an intimate and direct relationship with the investor, providing the distributor or fund house with a chance to target investors with extremely relevant marketing communications.

Fund houses can, in turn, leverage advanced analytics and big data collected from structured transactional data from RTAs and other sources, as well as unstructured data from social media and other platforms to extract meaningful information on investor or distributor behaviour and use this information for more effective targeting of their respective investor groups. Analytic techniques can be used to cross-sell or up-sell products and increase each investor’s stake, among other applications.

Ramping up the technology platform

Technology can act as a key enabler and help the fund houses reach investors at a low cost and more efficient manner. AMCs need to make the relevant investments in technology to help reach investors to help ensure transactions on the channels of their choice.

Globally, robo-advisory is reforming the landscape of wealth advisery services. Digital advice is becoming a prerequisite for wealth management firms serving mass market as well as prominent clients.

While robo-advisers are quite sparingly used in India at present, the future is expected to see a rise in the cases of robo-advisers connecting directly with investors and more distributors in the arena. They are sprouting across the retail investing space.

Many new entrants and traditional broking firms have launched robo-adviser services in India. They are distinguishing themselves as the responders to the digital trend and crafting a model resonating with early adopters.

To sum up, the winning player will need to develop an outside-in perspective through a well-developed CRM system aided by technology.


This post initially appeared in the India Markets Observer 2017 where you can read the perspectives and views of other experts too. It is available to all for FREE. All you need is a minute to register. 

Download your copy Now!

The views are personal and not necessary those of the organization the author represents.

Add a Comment
Please login or register to post a comment.
Mutual Fund Tools