ROLE OF AN AGENT

As a Mutual Fund agent, you are an advisor representing the interests of your clients as well as the Mutual Fund organisations you represent. It is important that you conduct yourself as a financial planner providing sound advice to your clients on how to manage their investments. Investors place a great deal of trust and confidence in you, as it is vital that you provide them with financial advice that best suits their objectives and goals.

As a Mutual Fund Agent you must:

• understand your client's needs;
• bring various products to their attention;
• explain the opportunities and risks associated with those products;
• recommend those who match their requirements.

MUTUAL FUND - A GLOBALLY PROVEN INVESTMENT

Worldwide, the Mutual Fund, or Unit Trust Trust as it is called in some parts of the world, has a long and successful history. The popularity of the Mutual Fund has increased manifold. In developed financial markets, like the United States, Mutual Funds have almost overtaken bank deposits and total assets of insurance funds.

In India, the Mutual Fund industry started with the setting up of Unit Trust of India in 1964. Public sector banks and financial institutions began to establish Mutual Funds in 1987. The private sector and foreign institutions were allowed to set up Mutual Funds in 1993. This fast growing industry is regulated by the Securities and Exchange Board of India (SEBI).

WHY SHOULD YOUR CLIENTS INVEST IN MUTUAL FUNDS?

Having familiarised yourself with the industry, you need to know clearly the benefits that a Mutual Fund offers to your clients. The advantages of investing in Mutual Fund are:

1. Professional Management. Your clients can avail of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects the suitable investments to achieve the objective of the Mutual Fund scheme.

2. Diversificaton. Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline in the same time and in same proportion. Your clients can achieve this diversification through a Mutual Fund with far less money than you can do on their own.

3. Convenient Administration. Investing in a Mutual Fund reduces paper work and helps to avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Fund saves your time and make investing easy and convenient.

4. Return Potential. Over a medium to long term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

5. Low Costs. Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because their benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.

6. Liquidity. In open-ended schemes, your clients can get your money back promptly at net asset value related prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a stock exchange at a prevailing market price or avail of the facility of direct repurchase which some close-ended and interval schemes offer periodically.

7. Transparency. Your clients get regular information on the value of your investment in addition to disclosure on the specific investments made by the scheme, the proportion invested in each type of security and the fund manager's investment strategy and outlook.

8. Flexibility. Through features such as regular investment plans, regular withdrawl plans and dividend reinvestment plans, your investor can systematically invest or withdraw funds according to their needs and convenience.

9. Choice of Schemes. Mutual Funds offer a variety to enable investors to take advantage of opportunities not only in the equity, debt and money markets but also in specific industries and sectors.

10. Government Regulation. All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

HOW TO SELL MUTUAL FUNDS EFFECTIVELY

The key to becoming a top class agent is to earn your client's respect, trust and confidence by matching their financial needs with the right type of investments. Remember, selling is not just persuading your clients to invest in a particular scheme, but it also involves building up a relationship that lasts for years and stands the test of time.

Here are eight keys to become a successful Mutual Fund agent:

1. Know Your Products

To make a favourable impression, you need to understand the Mutual Fund Schemes you are selling and be able to explain their investment objectives, the risks, and any special feature they offer to investors. Also, keep yourself up to date on the track record of the scheme as well as the overall performance of the Mutual Fund.

Before recommending an investment you must know:

• the strengths of the asset management companies and sponsors of the Mutual Funds;
• the choices/plans available and the advantages of such choices/plans;
• the nature of the scheme - (does it provide growth or a regular income or a balance of both growth and income);
• the potential for returns, and the risk your client will have to bear to realise such returns;
• tax benefits, if any;
• operational details such as how to buy, how to sell or transfer to another scheme, etc.

The informatiom will be available in the scheme's Offer Document and other promotional literature published by the Mutual Fund. Making yourself familiar with them will help you to properly explain the product.

2. Know Your Clients

Clients are different. Their financial needs and choice of investment vary depending upon their age, earning capacity, family commitments and ability to take on risks. Some broad types of clients are given below:

• Young and accumulating: Typically under 40, seeking to build capital for a long-term goal such as buying a house, children's education or a family wedding. These clients may take higher risks for higher returns.

• Middle-aged with family commitments: Typically between 40 and 60, in their prime earning years and with family commitments that require large, periodic expenditures. They may be willing to sacrifice a higher return for a stable investment and lower risks.

• Retired: Typically over 60, seeking income to meet their regular expenses and are primarily concerned with safety of their principal.

• Institutions and high networth individuals: Corporates, banks, trusts and wealthy investors, who seek an appropriate combination of tax efficient growth and income depending upon their return expectations and risk taking ability.

3. Prioritize Your Clients

To make the most of your time, you must identify the clients with whom you can establish a good business relationship. There are three types of clients - respective, potential and independent minded. The receptive clients are those who will work with you to develop a financial plan, have the disicipline to invest regularly and believe in the merits of professional financial advisors.

The potential client is one who wishes to become a successful investor, but does not have the discipline or patience to do so. If you work closely with these investors, they could join the ranks of your good receptive clients. The independent minded are those who do not use financial intermediaries and prefer investing directly. Such clients need to be cultivated over time.

4. Understand Your Clients' Needs

For you are to be able to recommend a sound financial plan to your clients, you must understand their needs and priorities. Find out your client's:

• Investment Objectives: Try to establish what your clients' real needs are. "I need more money" is not a real need or goal. On the other hand, something specific like "I need money to send my kids to college" or "I need money to retire" is a real need or goal. You must probe ypur clients so that their real needs come out.

• Risk tolerance: Are they willing to take higher risks in anticipation of higher returns or would they prefer to paly it safe and accept lesser returns.

• Return expectations: What kind of returns would they like from their investment, how long are they willing to wait and in what do they want it i.e. capital appreciation or regular income.

• Cash flow requirements: How much liquidity they want and when do they want it.

• Tax benefits: Are your clients looking for any specific tax benefits on their investments? How important are tax concessions in choosing their investments?

  5. Help Them Choose Their Investments

  Having understood your client's profile and needs, you now have to advise them on where to invest. It might be a selection of only Mutual Funds or a combination of Mutual Funds and other investments. A few indicative scheme combinations are given below for your reference:

  AGGRESSIVE PLAN

  Money Market Schemes	5 %
  Income Schemes	10-15%
  Balanced Schemes	10-20 %
  Growth Schemes	60-70 %

  This plan may suit:
  • Investors in their prime earning years and willing to take more risk.
  • Investors seeking growth over a long time.

  MODERATE PLAN

  Money Market Schemes	10 %
  Income Schemes	20 %
  Balanced Schemes	40-50 %
  Growth Schemes	30-40 %

  This plan may suit:
  • Investors seeking income and moderate growth.
  • Investors looking for growth and stability with moderate risk.

  CONSERVATIVE PLAN

  Money Market Schemes	10 %
  Income Schemes	50-60 %
  Balanced Schemes	20-30 %
  Growth Schemes	10 %

• This plan may suit:
  • Retired and other investors who need to preserve capital and earn regular income.

  6. Encourage Regular Investment

  Advise your clients to invest early and stick to a regular investment plan. This will help them to make more money because the power of compounding enables your clients to earn income on income and their money to multiply at compounded rates.

  7. Commit Them to Invest

  The best plans and the best choice of investments are of little use unless your clients act upon them and invest. Ensure that your clients give you the commitment for their investment. Be ready with application forms and other documents and if necessary, help them to complete the paperwork and bank the cheques.

  8. Provide Personalized After Sales Service

  One of the most important responsibilities of a professional agent is to provide prompt, efficient and courteous service. You can build up lasting relationships by providing your clients personalized services such as:

  • making periodic calls to see if they need any help with their investments;
  • getting in touch if there is a great deal of fluctuation in market prices which may be of concern to them;
  • assessing any change in their personal circumstances which may call for a review oof the financial plan recommended by you.
  • informing them of new schemes and products that could be useful to them;
  • following up with the Mutual Fund if your clients have experienced a service related problem with their investments.

  Stay in touch with your clients on a regular basis. You will not only get more business from them, but you can also earn the business of their friends and relatives by getting positive references from them.

  SELLING TIPS TO MAKE YOUR BUSINESS GROW

  The previous section dealt with what you need to know about Mutual Fund and how to deal with clients. This section will outline seven useful and practical tips for becoming a successful sales person. These concepts are applicable not only to Mutual Funds, but are practised by sales people in many industries all over the world.

  1. Strengthen your prospecting skills to build a strong client base

  To build a successful agency business you need to establish a strong client base - one that you can keep adding to. This means that a lot of your effort should be directed at finding or prospecting for new clients.

  As a first step, you will need to generate a list of people who could become your potential clients. It could be based on membership of a club, association, professional group, etc. for which lists are readily available. Or you could select a particular locality in your town where you feel the residents may make good clients.

  Make contacts by either mailing or calling personally:

  • Direct Mailing - involves sending your potential clients a mailer describing how you can help them and then following-up with telephone calls to fix appointments.
  • Personal Calling - involves calling potential clients (telephonically/personally) with or without prior notice and explaining how you could be of use to them.

  As it is the first contact between you and the potential client, you must be prepared for a low sucess rate. However, these methods are essential to build-up and expand your client base.

  The second approach which is more effective is to gain referrals from your clients. This means getting the names of their friends and relatives whom you could contact. It could be vountary on the part of your clients or you could specifically request that they help with referrals. Here your chances of converting a "potential" to a regular client are higher, as your potential clients are reassured by the positive references on you recieved from someone they know.

  2. Ask questions and listen to the answers

  Whenyou ask your prospective clients a lot of investment related questions, you are telling them that you are concerned about their financial well-being. Investors give the right answers if they are asked the right questions. However, asking questions is not enough. You must listen to the responses and take notes if necessary because clients' answers are a vital input to developing a proper investment plan for them.

  3. Prepare, Prepare, Prepare

  The more time you spend on preparing, the more comfortable you will feel and the easier it will be for you to convince your clients. Preparation should cover all possible aspects relating to your client and the potential investment opportunities.

  Preparation should include a thorough understanding of specifics of the investments you are selling:

  • refreshing your product knowledge;
  • trying to know more about your prospective clients;
  • preparing tables, charts, reports etc. which help clients understand opportunities;
  • anticipating client questions and preparing your responses;
  • outlining and practicing what you are going to say when you meet your client.

  Or it could also include preparation on broader and more general subjects such as:

  • the growth and status of the Mutual Fund industry
  • fund concepts and new types of fund investments
  • changes in the markets or government policies
  • how market and regulatory reforms are helping to create increased efficiency, transparency and competition among Mutual Funds for the benefit of investors.

  Whatever you say, you must say it with confidence and conviction, which comes from understanding your product and the market and lots of practice. All successful people in any field attribute their success to preparation and practice.

  4. Practice basic etiquette and courtesies

  In any relationship which depends on trust and confidence, being courteous and presenting yourself professionally is very important. While building confidence in your clients through your knowledge and ability could take years, their faith in you could be eroded, in minutes, if you show discourtesy or lack of professionalism. Therefore, keep the following courtesies in mind:

  • Be smartly dressed amd make a favourable first impression;
  • Don't just drop in on a client. Take an appointment;
  • Having taken an appointment, don't be late;
  • Spend a minute or so making polite enquiries;
  • Present yourself as warm, approachable and thoroughly professional;
  • Do not waste your client's time. Finish your business quickly and leave.

  5. Get the most out of your Mutual Fund

  To be able to sell Mutual Schemes effectively, you need to insist on total support from the Mutual Fund managing the schemes. Ensure that you ask for their product literature, latest investment strategies and details of new products and initiatives. And use this information to communicate with your clients. In addition, you need to pass on any feedback obtained from your clients to the Mutual Fund to enable it to be responsive to your client's needs.

  6. Stay visible and keep in touch

  Many times it may happen that the markets decline and your investors incur a short-term loss in the investments you have recommended. At such times, the tendency is to avoid calling on your client's because you are worried that they may have a negative reaction. But it is in such adverse circumstances that your clients need your reassurance most of this is when your visit or call will be most appreciated. By staying in touch and communicating in difficult times, you build lasting relationships.

  7. Set goals for yourself and determine to be successful

  The first and the most important step in becoming a successful agent is to have a desire for achievement. This involves setting specific goals such as "I want to increase my monthly commission from Rs. 5,000 to Rs 8,000" or "I want to add 10 new clients every month" or "I want to have a new office by year end". Write these goals down and monitor your progress.

  After you have decided what you want to accomplish, the next step is to work out your stategies to achieve these goals. Strategies could include "Do 100 direct mailers each month" or "Call 3 new prospects everyday" or "Add on a new Mutual Fund to represent this year" or "Add 3 corporate clients in the next 3 months". Review your goals and action plans periodically to ensure you are on track and if neccessary increase your efforts to achieve the level of success you desire.

  EIGHT KEYS TO SELLING MUTUAL FUNDS

  1. Know Your Products
  2. Know Your Clients
  3. Prioritize Your Clients
  4. Understand Your Client's Needs
  5. Help Them Choose Their Investments
  6. Encourage Regular Investment
  7. Commit Them to Invest
  8. Provide Personalised After Sales Service

  Give a professional touch to your job. Keep in regular touch with your clients. Remember always, a satisfied and well looked after client is an important asset to your profession.