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.
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.
three mutual funds, JP Morgan, DSP ML and Kotak MF jointly sponsored a staff offsite
for their distributor ABN Amro in Goa.
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.
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
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
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.
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.
have absolutely no interaction with the bank''s financial advisors who interface
with bank customers.
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