One of the biggest challenges for AMCs is to win greater mindshare and therefore larger allocations from their distribution partners. After all, there are 40 + AMCs in the market and a typical distributor would focus bulk of his business only with 6-8 AMCs. What should an AMC do to win the trust and confidence of quality advisors and distributors and therefore cement its position as a key partner for them? Dhiraj Mittal - one of Delhi's fastest growing advisors - gives a simple set of 7 steps that AMCs should take, to win distributor mindshare in this fiercely competitive market.

Happy distributors fuel growth. There are simple ways in which AMCs can make and keep their distributors happy - which in turn will motivate them to increase their business with such AMCs who focus on these basics. In my experience many AMCs miss out on small steps required to corner a larger share of the distributors' business. Here are the 7 steps, which I think AMCs should embrace if they are really serious about increasing their mindshare and business volumes from their distributors :

1. Discipline and consistency in fund performance

The AMCs and the distributors exist for the client, and the focus should be on simple products, disciplined adherence to the scheme mandate, consistent performance, decent alpha generation (that's why one chooses a managed fund over an index fund). Good short term performance may bring business, but it is the long term consistency that retains assets.

2. Consistency in brokerage structures

There should a very high level of consistency in the brokerage structure. Any reduction in brokerage structure (without any structural change in the industry) gives very negative signal to the distributor community and they are always apprehensive about increasing stakes in such AMCs. A very large AMC rewarded my exceptional last financial year performance by reducing the long term trails this year, imagine what they would have done in case of an average performance. Also, most AMCs never care to verify whether the brokerage rates committed to the distributor stands correctly updated with the registrars. At times the errors get detected a year later, leaving a question mark on the AMCs trustworthiness. I doubt if many distributors carefully check their brokerage statements (specially trails), if they do, they will invariably find errors in every other statement.

3. Promote higher trails

Upfronting of brokerages require investment on the part of the AMC. It also inculcates the habit of living off credit (against future income) which is against the basic tenet of wealth creation that the industry promotes. Higher trails is a better option.

4. Consultative approach before taking decisions

Many a times, the AMCs make major changes (exit loads/brokerages etc.) without taking any inputs from the people these changes effect. Changes thrust by the AMCs (without any valid reason or consultation) are a strict no no. The recent examples are of exit loads of upto 3% in equity schemes and extending the exit load period to 2 years by some AMCs. These AMCs assume that higher exit load is a good way to improve the persistency of assets. The message the distributor gets is, if u invest in such a fund and need to exit due to reasons like emergencies, portfolio rebalancing, scheme's underperformance, it would be a very costly affair, better skip such schemes in the first place. Higher long term trails can drastically improve the persistency of assets and its much cheaper than the cost of new business.

5. Take your RM's feedback and inputs seriously

To a distributor, the AMC's RM is like a buddy, not many AMCs recognize this and don't pay serious attention to the RMs inputs. Most of his inputs get caught in the hierarchical maze. The business of most distributors is skewed towards a few AMCs, which though is primarily due to scheme performance, but is also largely due to RM performance. Though in the AMCs hierarchy, the RM is a very low position, but my belief is that he is as important as the fund manager, the better RMs get more business. The RM needs to be groomed to work as part of distributor's team and his performance should be assessed based on his contribution in the growth of the distributor.

6. Help distributors grow rather than focussing only on higher share in existing pie

For any relationship to foster and grow, both the parties should endeavour to give more to the other, more business by the distributor to the AMC and more efforts by the AMC in scaling up the business of the distributor. Most of the AMCs are busy trying to corner a larger share of the limited business of the distributor, instead the effort should be on increasing the overall business of the distributor thru better software, team building, improving the reach, scaling up of the business etc. The AMCs taking such initiatives get larger share of the improved business.

7. Product updates & recall

Regular product training for the distributor and his team is a must. Many a times good scheme don't get aggressively sold because of lack of indepth knowledge and low recall.