labels: marketing - general, mutual funds
Mutual funds woo distributors with holidays news
03 September 2007

Selling financial products such as mutual funds is lucrative business worth over Rs1 lakh crore every year. Add to that a surfeit of mutual funds that are constantly wooing distributors such as banks to sell their products.

Sun, sand, surf or the lure of an international destination. Sending distributors on holiday seems to be a good way to get them to work harder and almost every mutual fund is doing just that, reports CNBC-TV18.

Organising training sessions at a central location for distributors or sales is a common and cost-efficient practice. There couldn''t be a better and more cost effective way of educating intermediaries.

Recently three mutual funds, JP Morgan, DSP ML and Kotak MF jointly sponsored a staff offsite for their distributor ABN Amro in Goa.

And in the past year many mutual funds like Fidelity, Templeton, Reliance, HDFC and HSBC have sponsored offsites and contests for Citibank, Stanchart, HSBC and HDFC Bank that sell mutual fund schemes.

Some distributors such as HSBC and HDFC Bank claim these sponsored trips are cost effective training sessions. Others like ABN Amro put it more fancily "Such meetings help client-facing staff to provide the right level of consultative approach to clients."

So what''s the big deal you''d say? It''s just a marketing incentive and every other mutual fund is doing it. But not every other distributor is comfortable with the practice.

There are some like Deutsche Bank and Kotak Mahindra Bank that refrain from sending staff on mutual fund sponsored visits. It''s a global best practice they adhere to ensure that their independent financial advisors stay independent.

In fact in large global banks there is a clear distinction where mutual funds and other such financial product companies interact only with the bank''s product team that decides which products the bank will market.

Funds have absolutely no interaction with the bank''s financial advisors who interface with bank customers.

In a self-regulated industry it''s best that all players adopt global best practices before someone like SEBI steps in. The securities market regulator has already clamped down on sales incentives like rebates and is keeping a strict vigil on distributors who try to churn their client portfolios. Goa and Singapore may not be so attractive after all.

also see : General reports on Banks & Financial Institutions

 search domain-b
Mutual funds woo distributors with holidays