IRDA for proper compensation for fin product distributors
Mumbai: There are several emerging challenges in the distribution of financial products given the larger extent of financial exclusion and lack of financial deepening, said top professionals from the financial services industry here.
"Distributors of financial product needs to be compensated adequately but equally important is increasing the range of products for the customers, particularly for those in the rural and semi urban areas," Insurance Regulatory and Development Authority executive director Sriram Taranikanti said while addressing the CII's Financial Distribution Summit 2012 here.
Taranikanti also stressed on the need for convergence towards the rural side besides working towards reducing possibilities of mis-selling.
Since the combined market potential of the emerging middle segment is expected to cross the USD 1-trillion threshold by 2021 from 470 million in 2010, financial service businesses will need to work out how best to market and sell to the emerging middle and wider millennial generation, he said.
Addressing the summit Bajaj Capital vice-chairman and managing director Rajiv Bajaj said, "the margin in the industry has come down and there is no other way but to increase volume and for that what is required is bring in talent in our distribution agencies."
"Customer opportunity and customer value are two things and what we really want to give is value to the customer," he said.
There have been successful models like the micro finance and micro mutual funds, but still the financial planner needs to take up the responsibility of fostering financial education, Bajaj said.
Industry professionals also highlighted that industry needs to debate on the advisory and agency/ distributive models of distributing financial models, particularly at this juncture when the country's economy including the financial sector is expanding while a vast section of population lies financially excluded.