Suraj is leveraging his vast experience across the fund, insurance and distribution businesses to rapidly regain market share that UTI lost in recent years. It's the same breadth of experience which he brings to bear in this candid interview, where he discusses 5 challenges that the industry faces, which need to be overcome to achieve any meaningful penetration. Can a tied agency model help exponentially expand distribution, which is still growing at a very slow pace? Suraj believes a mid-way solution is what is required to interest AMCs to invest in IFA expansion and at the same time, enable IFAs over time, to serve clients through an open architecture model.

WF : You have rich experience in leading the Indian sales teams of well respected multinational fund houses. How is UTI different? What are strengths that are unique to UTI and what are areas you would like UTI's sales team to become better in?

Suraj: At the outset, I must confess that I was pleasantly surprised with the capability and the passion of the team. UTI has been the pioneer in building the IFA channel in the country. The team has tremendous amount of commitment to the distribution community and we definitely have a unique position in the market in terms of our reach, knowledge and the depth of our partnerships.

Our strength is our relationship with the distribution fraternity. We have invested our time and energy in building and nurturing these relationships over the years and have access that cannot be matched by any of our competitors. We are the "at-hand-across-the-land" brand for all stakeholders. We have been consistently embedding strong product skills and technology to enhance the quality and productivity of our sales partners. I would be keen that the sales team builds further on these strengths across all distribution channels.

WF : The industry is sitting up and taking note of the very impressive mobilizations that you are able to garner in your closed ended hybrids. How retail and widespread are these mobilizations? What are you doing different, which is enabling you to deliver these performances?

Suraj: Thanks for your acknowledgement of our stellar numbers. The strength of our countrywide presence is also seen in the fact that 62% of the NFO business have come from the B15 locations.

I would say that rather than doing something differently we have been doing things consistently. Engagement, engagement, engagement are the top 3 things we are doing for our partners. At the centre of what we are doing is a core Product idea. We realized that rather than bringing out me-too products we should come out with products having a compelling story for the investors and partners.

The simplicity of our communication and the differentiated approach backed by innovative Marketing support using Digital, Social and Offline mediums helped us garner our numbers.

WF: How do you see distribution evolving over the next 5 years to address the twin objectives of reaching out to more investors and at the same time delivering quality advice and service to them?

Suraj: Rather than answering this directly I would like to list down the challenges for the industry.

1. Investor awareness and interest

1. Overall low consumer awareness and interest in MFs (driven in part by low marketing /education investments by AMCs - unclear benefits of investor education spends)

2. Inverted risk-return perception amongst investors (i.e. investors view MFs as high risk, low return)

3. Belief that MFs are suitable only for HNIs (e.g. lack of awareness of SIP options)

2. Highly concentrated distribution landscape (geographic concentration and player concentration)

3. Inability/reluctance to invest in new IFA creation, IFA education and training.

4. Patchy service levels a major deterrent to investors (e.g. almost impossible to get a consolidated view across full portfolio in spite of Consolidated SOA, given PAN and e-mail requirement - many distributors have not passed on e-mail IDs to AMCs)

5. Service levels further impacted by low levels of contactability with consumers (potentially the only service industry where the provider does not "know" the consumer / is unable to contact them as needed)

My view is that as an industry we have to find solution to these challenges facing the industry and the distribution community. These along with adoption of technology will lead to the evolution of the distribution network.

WF : Much has been spoken and debated about the merits of a tied agency model to spur distribution footprint. UTI has the richest and longest experience in nurturing and growing its agency network. Do you see tied agency model as a solution to expand distribution? Is it possible to achieve this in the current MF industry framework?

Suraj: Tied Agency is an established form of architecture in other investment categories like insurance. We believe that the "Tied" agency model would encourage AMCs to take a serious view of building the IFA channel as there would be sufficient incentive to invest in this channel. Over time, we would like the IFA to service all the needs of the customer and hence would be fine if the IFA is allowed to sell other products as well after a cooling period (say 5years). The incentives provided to expand business in B-15 towns is unique to India and we believe that a tied agency that eventually evolves into open architecture could also be a unique approach to building the market for mutual funds.

WF : What is your business outlook for 2015 and what do you see as the key growth drivers for 2015?

Suraj: The key drivers of our business are Markets, Taxation and Regulation. We do believe that the equity market is well poised for growth over the next 3 years on back of expectations of strong corporate earnings. With interest rates expected to go down as well in 2015, it would be a great year for fixed income investors as well. Clearly markets would help drive growth for mutual fund products as well. It is difficult to predict what course taxation and regulations would take but we would have clarity on the same by the end of Q-1, 2015.

WF : What are your business plans for 2015 in terms of products, distribution and marketing?

Suraj: Our product and distribution strategy is based keeping the needs of our consumers in mind. UTI MF was set up to channelize middle class household savings into capital markets. This has been our guiding principle and we do believe that whether it is 2015 or beyond we will continue to deliver on this vision.

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