Market correction is taking a toll on mis-sold and mis-purchased SIPs.
SIP cancellations have risen sharply from the normal 50% of new SIPs to as high as 109% of new SIPs in January and may continue this rising trend in February as well. We are now in a net monthly reduction cycle of SIPs.
Ground level feedback from different regions indicates that SIP cancellations are high among direct investors, fintech investors and investors using banks. MFD clients seem to be displaying lot more conviction through this market correction.
60% of the industry’s total investor base (3 cr out of 5 cr) came in the last 5 years – most of them haven’t experienced a real market correction like this one and many don’t have access to good guidance.
This has triggered perhaps the biggest bull run for MFDs –there could easily be upward of 1 cr investors who are right now anxious and looking for good guidance – something that good quality MFDs are very well placed to offer.
This opportunity will be available only to those MFDs who rise up to grab it. Increase your social media presence with relevant topical educational content, step up IE sessions, go out and reach out to anxious investors.
Bull markets favour guidance-light intermediation channels, bear phases allow guidance oriented intermediaries to rapidly gain market share. Don’t let this opportunity slip out of your hands!
MF industry should expect muted flows from existing MF investors – they are no longer in buy-the-dip mode; they are right now inwait-and-watch mode.
The recent Budget can potentially trigger a wave of redemptions from SWP oriented seniors to ensure full utilization of the Rs.12 lakh income exemption limit. Time to proactively switch from SWPs to dividend plans (IDCW).
This is equally the time for MFDs to step up engagement with existing clients and help them navigate this correction with confidence and conviction.
We have so far seen price correction – we cannot rule out several months of time correction that can now follow, before the bull market resumes.
Time corrections cause restlessness among many investors – heightened engagement is the only solution.