The Family CFO with a Difference

To begin, I wish all our MFD Friends and their families to Stay Healthy and Stay Safe during this current period! This too shall pass over soon & we together shall emerge through this period winningly!

Ever wondered what is a role of a CFO?

Simply put, a CFO of a Company is responsible for managing the financial requirements of a company. Tracking cash flows, financial planning, analysing the company's financial strengths and weaknesses and proposing corrective actions. These are in very simple terms the functions and responsibilities of a CFO.

The total folio count in our Industry is at around 8.88 Cr Folios of which 6.37 Cr folios are in Equity as an asset class, an impressive around 72% (as on February 2020). The recent SIP numbers published have only shown a positive trend at 3.11 Cr folios & INR 8,641.20 Cr in the month of March 2020 as inflows, with overall FY 2019-20 inflows through SIPs crossing INR 1 Trillion mark!

The interesting point to note here is that almost 90% of the Total Industry Folios are identified as “Retail Investors”. Further, over 26% of the SIPs are managed through the MFD’s (as on February 2020). The MFDs today have a market share of over 16% (as on February 2020) across all Asset Classes in Mutual Funds and is certainly growing at a fast pace. In these challenging periods, the MFDs are reaching out even more than ever to their Clients through various non-physical mediums and hand holding the investors through these volatile markets, certainly helping the Investors to navigate through this period smoothly.

Now, ever wondered what is a role of a MFD?

Well the role of a MFD is like a “Family CFO” with a Difference!

As a Family CFO, the MFD understands the cash flows, the leveraged position, the medium and long term financial goals, the future earning capacity, the risk appetite, the timely liquidity requirements, the financial product understanding, the myths about risk and investing etc, of the Investor Family. Basis thedeep understanding to many such factors, the MFD provides the right investment solution to the Investor Family explaining in depththe features &risk associated with them.

MFD is also an emotional repository partner of the investor family. The financial difficulties, the cherished moments, timely advices on certain personal family matters related to child education, career etc for the investor family is something that are provided with a smiling face by the MFD. Well, the MFD does become like a family member. Hence, sharing the platform as family and their emotions too!

Further, the MFD is a Trust and Confidence repositoryas well. During the various interactions with investor family, there are financial trust that are shared with the MFD. Particularly in a family where there is more than one earning member etc. Sometimes it is observed that the earning lady of the house would request the MFD to keepher investment decisions as undisclosed or the male member would request the MFD not to disclose the entire value of investments so made with his family, this scenario is also true in case of other relationships within the same family. Well they have their own reasons& we will not be judgemental of such decisions by the Investor’s. But this increases the challenge of the MFDs role for sure!They managesuch situation carefully and sensitively, as the MFD is providing Investment solutions tomultiple clients, in the same family! Hence, MFD is a great repository of Trust and Confidence too!

So, the MFD does become like a family member to the Investor and their families. They are catering in a multifaceted manner with the Investor Family in a cohesive culture. Now this role of the MFD may sound easy, well you must try it to understand the complexities managed by the MFD!

Would also suggest a few inputs to my MFD friends:

1. To keep thoroughly updated on the financial happenings across, hence read as much and interact with other MFD friends and industry experts. Also, it will be a great thought to be equipped with investments through/in multiple asset classes and not just Mutual Funds.


2. Do a soft review with the investor every half year, a 360 Degree review. This review will be specific to your own behavioural qualities and personality. Sometime what meets the eye may not be the reality! It will also help you to improve your skills and qualities constantly.


3. Review “Your” performance every Half Year with the investor. The investor will be delighted to note that as his MFD, you consider their financial goals as significantly as them.


4. Quarterly Investor Financial Objective reviews, the core. An important aspect to update the path of their investments and its progress. Always a great idea to provide the Financial Objective review through a formal letter on your letter head or an email providing the details of investments and their value in a pictorial format, appeals to the eye. Also, sometimes excel gets bring too! Any Market movements and their negative impact, is more important tohighlight than the gains. You must be the first and the only to update the investor on any short term notional loses so created due to adverse market movements etc.


5. Must create Testimonials from your clients and their families. This is your greatest endorsement, the most effective direct marketing you can ever create to increase your client base and comfort your existing clients.


6. Invest in technology for the long-term cost saving& the growing competition. Paper is old! Let’s go paperless as it is also convenient and trendy. If possible create a crisp website of your own.Also, various reviews can be easily done through Webinars etc. Technology will be a great catalyst for the next growth of your business and provides multiple innovative service techniques as well.


7. Social Media presence. In today’s day and age, it’s impressive to be on Twitter, Instagram, LinkedIn and also write a Blog etc. Request your clients to follow you through such social mediums andconstantly keep posting news feed on them to be read by the investors. It could be market related article, Fund Managers commentary or even your views.

I do believe that the MFDs are performing an incredible passionate work in introducing new investors to various financial products particularly in Mutual Funds. I do expect these “Family CFOs with a Difference” to continue growing and emerging as “Winners Throughout”!

The author is Suren Kochhar, Senior President, Head of Sales & Marketing, YES Asset Management (India) Limited.