FIFA & Final Mile Consulting Study Helps You Attain Your Financial Goals

· The study aims to improve retail penetration in Indian Mutual Funds (MFs) by understanding quality of awareness among potential and existing investors

· This “Indian Mutual Fund Investor’s Awareness Study” uses a behavioral science lens to understand the reasons why the Indian investor has a sub-optimal engagement with MFs

Mumbai, February 13, 2018: Foundation of Independent Financial Advisors (FIFA), and Final Mile Consulting are proud to unveil their study, “An Examination of Indian Mutual Fund Investor’s Awareness 2018: A roadmap to improve mutual fund penetration among Indian investors” for the mutual fund investor fraternity.

The study aims to improve retail penetration in Indian MFs by understanding the (i) Quality of awareness among potential and existing investors, (ii) Barriers to engaging with mutual funds and the role of regulations and (iii) Role of communication and intermediaries in influencing decisions related to investment in mutual funds.

Commenting on the launch, Mr. Dhruv Mehta, Chairman, FIFA, said, “FIFA is delighted to partner with Final Mile Consulting and release this comprehensive study which is one of the first in the country. This study serves as a baseline understanding for how Indian investors view the mutual fund asset class as well as mutual fund advisors. It seeks to answer specific questions that would touch on concerns of all mutual fund stakeholders like Government, Regulator, Manufacturer, Distributor, and Investor.”

The study used learnings from behavior science to understand Indian MF investors. This study reveals four distinct behavior segments of investors in the Indian MFs. The segmentation is a function of Investors Income and Responsibility (Financial Dependents). These plays an important role in their motivation to engage with Mutual Funds. The four distinct segmentation are viz. Deficit Frame Investors, Surplus Investors, Moderately Deficit Investors and Moderately Surplus Investors.

The motivations and goals of each of these segments of investors moderate their engagement with MFs, thus calling for a segmented approach to the framing of Mutual Fund value proposition. But all these segments of investors do face common engagement barriers in their journey to become long-term Mutual Fund Investors. The study also enumerated barriers in the investors’ journey from a non-mutual fund investor to a sophisticated mutual fund investor. We have also mapped many of the heuristics and biases which investor’s use to cope with these barriers, and recommendations to mitigate the same.

The behavioral segmentation among the Mutual Fund investors are:

1) Deficit Frame Investors: A person whose income is less than his lifestyle aspirations and doesn’t have any financial dependents

2) Moderately Deficit Investors: A person whose income is still not matching his lifestyle aspirations but has financial dependents to take care off.

3) Surplus Investors: A person whose income generates surplus after accounting for all his debt obligations and financial dependents needs.

4) Moderately Surplus Investors: A person who has accumulated a corpus, future income potential is low but doesn’t have too many financial dependents.