The Hindu Business Line : `Business of investing is not a one-day affair'

The trend, indicates Mr D. Arulmany, Business Head of CDS, is spurred by a section of investors who are forever keen to enter and exit as well as some distributors who encourage such rapid changes in allocations by their clients.

Excerpts:

How do you view the churn that happens so rampantly in Mutual Fund sector?

This takes place because certain investors are overly interested in moving out of their funds as soon as they have entered them.

Such a strategy, however effortlessly it may be pursued, has its pitfalls. There are costs that the investors concerned will be required to bear. Besides, the possibility of generating wealth - by staying invested for sufficiently long periods of time - will diminish.

Actually, some quarters are refusing to think beyond the short term. For them, the temptation to get out at the earliest opportunity is too strong. But this attitude needs to change, especially if capital has to be adequately preserved and created.

Are people actually making mistakes in choosing their intermediaries?

One should realise that the business of investing is not a one-day affair. There has to be a certain level of awareness, which should be reflected in their choice of advisors as well.

A well-informed investor is one who has sufficiently educated himself in this regard. There are various types of investment consultants in the country today. So, the choice has to be right.

Most of us consider ourselves to be masters when it comes to investing and allocating our assets. We run to a doctor, a specialist, when we are sick. However, we do not always view investments from that angle.

Can distributors play a role here?

Yes. The real challenge for distributors is ensuring quality. I am referring to the kind of advice and service that is being offered to clients. Remember, for the distributor community, the whole operation is getting more complex. There are newer, smarter products.

Besides, lots of players have entered the fray, some in a very organised manner. Many banks, for instance, are trying to provide a full suite of services.

What are your plans for expanding the business?

We have focused on long-term relationships with clients. The idea is to help them create wealth over time while equipping them with sound advice.

The advisory part is particularly important in a situation marked by strong ups and downs in sentiments.

We have realised that `space' is strictly not an issue in this market as there is enough scope for growth.

As for enlarging our range, we have lately started introducing clients to the portfolio management service launched by Chola Securities, the broking outfit in our group.

The latter, branded as Sigma, is aimed at HNIs and comes with four options, depending on the risk profile of the customers.

It acts on a discretionary basis - a client can leave the decision-making to a team of people who take care of transactions.

Can fee-based advisory services ever become a stand-alone proposition?

At the moment, it is largely a sales/commission-driven scenario. Fee-alone services, I am sure, will grow in stature, especially when more people start accepting them as key inputs.

Till such time, the present model is likely to continue. It will depend on how critically the concept is understood in this country.

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