Last month, Karan Datta took us through Shubhchintak - Axis MF's comprehensive financial planning and practice management platform that has been warmly received by large cross sections of the IFA fraternity. For Axis MF, its more than an IFA platform, say Karan and Chandresh - it's a whole new way of life. What's the big picture thinking that has prompted Axis MF to embrace this initiative as a whole new way of life? Why is it so central to their strategic plans? Chandresh takes us through the big picture view - and what emerges is a clear understanding of the problem that prevents retail penetration to the extent the MF category deserves, a grounded view of why the problem persists and a solution that attempts to genuinely tackle the root of the problem. At the root of the problem is a need to raise the profile of an IFA in the eyes of investors, and that's where ShubhChintak can play a critical role.

WF: Congratulations on the launch of ShubhChintak, a proposition that has been warmly received by the IFA fraternity. Can I ask you to take a step back and walk us through what were the key drivers for you to look at this proposition? How do you see ShubhChintak catalyzing change in the industry?

Chandresh: Thank you Vijay. Let me first give you a brief on what we actually think are some of the key challenges for our industry and then explain where exactly ShubhChintak fits in.

From an industry perspective, we have less than 4 crore accounts and they are reducing day by day. Probably we are present in about 1 crore households, maybe even less than that. The target segment should be the vast majority of middle class savers, which is upwards of 10 crore homes. If you look at products from across the industry with some vintage, we all believe we have got a great product. Unfortunately we have not been able to communicate the relevance of this product in the lives of our investors. In fact many of the investors who are there with us are not very happy investors. This is basically the timing issue - the whole story about how funds have performed well but investors' returns from the same funds is much lower because of behavioral reasons and no money has been canvassed from them at a time when it perhaps should have been canvassed and the fact that investors are more open to giving you money when markets have already run up.

So at one level we as an industry want to grow from being in less than 1 crore homes to being an integral part of the savings and investment habits in 10 crore homes in India. That can only be achieved if investors benefit from our products - which most are not, at present. Therefore, the first step in this journey for us is to get investors to have a much better experience with mutual fund products. No market expansion can really take place until and unless we crack this problem.

Now if you really want to do that then a significant gap needs to be bridged. We need investors to be more aware and educated about things like long term financial planning, asset allocation, goal based investing rather than return based investing etc. It is a challenge not only in India but world over to get people to plan long term and we all know the benefits of long term planning and reduced risk and reasonably higher returns that beat inflation.

All of us in the industry want this to happen. But it can't happen by merely talking about it. It can't happen only by running investor education programs around it. For this message to be really transmitted effectively, for behavior to change, you need significantly higher levels of engagement with investors, on an ongoing basis, and with a completely different approach.

ShubhChintak aims to be the catalyst that will bring about this transformation in the way our industry interacts with investors. ShubhChintak's overarching aim is to help investors get a good experience with mutual funds, become happy investors and therefore build conviction in our products and refer us to their friends and colleagues. This is the only way we can go from less than 1 crore homes to 10 crore homes.

The most critical link in this interaction with investors is the distributor. It is the distributor who has to help investors move onto a goal based approach rather than continue with a transactional approach. From an investor's point of view, he has been seeing this distributor through a transactional prism all along. The important thing therefore is to first raise the profile of the distributor in the eyes of an investor from a transactional agent to a financial advisor. ShubhChintak is a catalyst that will enable investors to see distributors in a whole new perspective - which is the first step for entering into a different level of engagement. ShubhChintak, with its comprehensive, open architecture suite of planning, execution and reporting support, and its complete CRM suite, is aimed at enabling a transformation in the way our IFA partners interact with and support their investors. We firmly believe that it is at this level that our focus ought to be, for us to ensure that over time, we have many more happy investors than we do, which will seamlessly drive market expansion.

I am not saying that the distribution fraternity is not already on this journey. Many are, and have happy investors as proof of their own efforts. But for those distributors who would like to go down this path, but have not had access to what it takes to make this journey successful, ShubhChintak is your well wisher who will get you to where you want to be.

So that is one of the things that we are trying to build. The second thing that we are aiming is to get a sense of alignment which certainly comes with long term planning. An alignment between we as the manufacturer, the intermediary and the investor so that you are able to reduce the overall cost of delivery of the product. Let me elaborate on that.

At one level the problem is about being effective in understanding and solving a particular investor's financial needs and on the other level is the productivity and efficiency by which we can do that. So by focusing on goal based planning and getting an emotional connect and getting the engagement right and giving the right inputs to IFAs in terms of educational material and the pitch, hopefully we will be effective. Obviously this is not going to happen in a day. It is going to take some time and this requires a little bit of investment in time and effort on the part of the IFAs. But over a period of time, we will reach the effectiveness and be able to address the investors' long term needs.

So on one side, we should be capable of providing that service and the other side the investor should be open to receiving that service. That comes only through engagement and this platform helps to build up that engagement. Once you achieve this engagement, you will find the cost of servicing will come down significantly, and therefore overall cost of delivery will reduce. Distributors will spend less time in discussing every NFO that comes in, will spend less time in servicing portfolios that are cluttered with several schemes that got accumulated through various NFOs and sales pushes, and will hopefully engage in more meaningful conversations with clients about their goals, have regular investment plans set up for each goal and therefore enhance their own productivity significantly.

So, what we are trying to do is to raise the profile of an IFA in his investor's eyes, enable the IFA and the investor to have qualitatively superior conversations that help generate better investment outcomes and over time, also drive up the IFA's productivity through better sales and engagement processes.

WF: What would you define as the success criteria for ShubhChintak 5 years from today? And, what benefit do you see Axis deriving from this huge initiative?

Chandresh: Axis is a well established brand but as a mutual fund house, we are new. We are just about completing 5 years in next two quarters. In our initial phase, it was about getting our products out in the market, establishing our presence and looking for some market share in the existing pie. We have done that. We have got all the products rolled out. We have shown significant innovation in products and in the way we have managed money. People have understood our investment philosophy, our investment style and management approach. So all the building blocks are there.

Now, we are shifting gear and shifting orbit. We have done reasonably well in the last 5 years and what do we want to do from here is move on from just a market share game, to making our efforts in expanding the market. To our mind it comes back to the same thing which I said earlier, we want to create large number of happy customers and investors and hence ShubhChintak is very important. I think ShubhChintak is important not only for Axis but for the industry. It is important to have a large number of happy customers, and this is certainly an important step in that direction. We believe it really helps the industry as a whole to get in and do business in a manner which is little different from what we have been doing in the past with the objectives of having satisfied customers and empowering the IFAs to get us those satisfied customers. It is extremely important for Axis and is not just a new initiative but a completely new way of doing business as what we envisage using the ShubhChintak platform.

So initially we just rolled it out and it is still in the pilot stage. We are getting some feedback. Just like with all great ideas, I think ultimately we will have to show significant innovation in delivery and in execution. I think those things should get ironed out over a period of next 6 to 12 months.

In the next 5 years or so, we will be happy to see a large part of the IFA community coming on to the ShubhChintak platform. As you know a large number of IFAs have gone out of the distribution business. We would like to create a large number of advisors and provide them with confidence that this is something which can be seen as a profitable career option. If you look at the insurance industry, there are over 20 lakh agents in the insurance business. We need to create a similar number to be able to go and contact or service or engage with the 10 crore households that we are targeting over a period of time. So I think if ShubhChintak can be a platform which can increase the number of IFAs who are in this business and help them have a profitable business, I think it would be very good.

From an Axis perspective, obviously as we are part of the industry, if the industry gains we will gain. We would like to believe that we will get some higher mindshare because of the way the initiative has been planned. I always believe mindshare leads to market share and that should lead to some reasonable business for us. It goes without saying that we are looking for some commercial benefit from an initiative like ShubhChintak, which we hope will come from increased mind share translating to increased market share in the near term and in the longer term, from getting our reasonable share from an expanding market.

For the next 5-10 years, we will have to start looking at our industry in a different manner. There have been some recent reports that suggest that globally asset management is actually going to become much larger than insurance and banking the world over. If that happens globally, it should happen in India as well. At the end of the day a significant part of all the money to be managed has to come from retail investors and some of it will be institutional. Today, mutual funds form a tiny fraction of a typical saver's holdings. Why should we not aspire to have 40-50% of his financial savings in mutual funds, over time? Why should we not aspire for him to set up goal based plans and commit a sizeable portion of his monthly savings towards these plans, all on ShubChintak? This is already happening in other parts of the world - why can't we try and make it happen here in India?

WF: Chandresh, congratulations once again on the farsightedness with which you have backed this very ambitious project. As you mentioned, with all good ideas, execution is vital. And perhaps the immediate challenge is that if we have a backdrop of a new bull market in equities, conversations with clients can very easily move into the familiar return and product oriented territory, rather than long term goals based, which is sometimes seen as boring in a bull market. Wish you and your team all the best in your efforts to help get the client conversations right at least in this market cycle - which will be the first milestone in the industry's efforts to creating happy investors.

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