Rise of RevOps as MFD by Siddhartha Dash Exec. VP | UTI

foreign [Music] good evening and uh first of all a big you know shout out to the organizers for making this wonderful conference reality a big shout out to the organizing committee I think a fantastic job to get 500 odd members here and a list of very talented speakers the topic of my presentation is increasing Revenue Ops uh for mfds ah now it's it's something that all of us aspire to we all aspire to increase our Revenue we all aspire to increase our business but the one thing that we need to be sure is that we need to look at the long term for generating Revenue we are in the business of mutual funds this is a business which is for the long term it creates wealth for investors and with that wealth for the investors is where our revenues as The Amity fraternity will actually lie ah so I will I will take a little uh different route of uh trying to give you inputs about how opportunities are there in the mutual fund space to generate higher revenues through the example of a product that we have recently launched which is the uh pragati sip so as Mr Buffet famously said never depend upon a single source of income make investment to create a second source why should one really invest there are we all know I mean we are in this business for quite a lot of time now there are multiple reasons why we need to invest we need to invest for our children's education for marriage for growth uh for buying a house for meeting our retiring expenses which is probably the most important uh uh you know probably one of the most important reasons why we need to invest for a secure future one thing that I think has been repeated again and again in many forums and I think I would like to reinforce this is that what I have learned over the last 25 years in the investment space is that there are very basic things to manage your Investments to do good Investments start as early be as regular and be as long-term as possible so these are the three basic fundamentals that I find should form the basis of any investment decision that one needs to do so if you take this example of a rupees 10 000 Sip and we take a 12 compounded interest over a period of 30 years this chart gives you a assumption this chart gives you an idea of how the Corpus falls down drastically if we delay our investments so if we have Investments for 10 000 for 30 years the Corpus goes to about 3.08 crores if we delayed by three years the Corpus comes down by 92 lakhs to about 2.16 crores ten years later if you start 10 years later and you invest only 10 000 rupees for the next 20 years the Corpus is down by almost 2.17 almost 70 percent the Corpus spinal Corpus comes down and you're left with a paltry amount of 21 lakh so the idea is start as early is the first Mantra of investments in fact all new joinies all new uh salary and whatever wherever you start I think the first thing that one needs to do is put a bit of amount of money for your Investments second thing and uh let me offer my apologies this presentation was actually vetted by the UTI compliance team but we have made a grave error here which is a loaf of bread they have mentioned is will cost 50 rupees 51 rupees in 2030 but I think all of us who go and buy bread it is costing 50 rupees as of today okay so I think we'll get that corrected next time so inflation is a reality inflation is a reality and we need to ensure that we plan ourselves for invest inflation the previous panel our gentleman mentioned that you know when he he when he started his work he set out a target of rupees 50 lakhs to to ensure that he retires early but then when that 50 lakhs came when it went away you know it it so inflation is a big reality and what we ignore is that probably yesterday's luxuries are today's necessities and we need to keep Pace with the requirements with the changed luxuries or the change Necessities that are required we have we have what we call the Sip I think all of us are aware of systematic investment plan a little bit of twist to that is a step up and it's a very very powerful tool which we can all use with our clients and we need to work on this we need to see the actual data and we'll see a significant increase in our investment Corpus in our returns in our overall Corpus that we build if we use a simple tool like a step up along with an sip so this this slide gives an illustration of that if you have a monthly sip of about 10 000 rupees for a 20-year period uh you will have without a step up an investment value roughly at about 91 92 lakhs we have taken an average return of about 12 compounded whereas with even a single 1000 rupees step up after every one year of investment that means after the first 12 months you increase the Step Up by 1000 rupees that means you are investing 11 000 rupees for the next year then 12 000 rupees then 13 000 rupees over a 20 year period your Corpus shoots up by almost 55 lakhs to about 1.47 crores what I want to highlight here is while it is a big Corpus for the investor it is also a big Corpus for our distribution friends our distribution fraternity That's The Power of a single thousand rupee step up which you can get to increase the AUM that you manage for your investor uh by using this technique here I would like to introduce the UTI pragati sip now pragati in the even in the previous panel discussion there was a discussion about uh how do we as what what is swp what is sip now pragati sip is a concept wherein we are combining sip with swp which essentially will allow a customer to invest accumulate a corpus over a period of time and when the time comes they can withdraw using an swp method to meet their daily expenses so it's a combination of swp and Sip and swp which has a wealth accumulations phase using the Sip where you can choose your sip amount you have a flexibility for a sip step up and this is what is very critical from the MFD fraternity I think all of us need to go out to the customers and make them aware and ensure that each and every sip that we do has an as has a step up component that's very critical to build up a sizable Corpus we have a range of sip tenures to suit your needs wealth accumulation phase uh can be you know from a to Infinity but starting from eight years we the the concept is that minimum eight years of accumulation phase exists before we can get into an swp mode then we have a period of the withdrawal of the accumulated wealth which is the swp period where you can enjoy periodic withdrawal of periodic cash flows into your into your system you can decide what is the tenure what is the swp amount it can be a monthly or a quarterly payout and the payments can be made till the units are available it's a simple four-step process to start a UTI sip prakati sip you have to obviously the customer has to uh you know review your risk profile and the financial goals set up an sip amount and the time uh choose a sip tenure it starts from 8 10 12 15. 20 25 or 30 years and select a scheme we have a whole list of schemes which I'll come to you depending on the customer profile now again just to highlight and this is an illustrative example again we have an sip tenure ranging from 8 to 30 years we so an investment with a step up with a step up a 10 000 rupees Step Up investment With A Step Above minimum five 500 rupees over a 20-year period if you accumulate the wealth whatever is your investment amount you can withdraw 2x of that amount after a 20-year period so if you are sorry a 10 year 10x amount so if you have 10 000 rupees as your sip after 20 years you can withdraw 10 into 10 000 which is one lakh Rupee per month from that Corpus to meet your daily requirements so it becomes a fantastic scheme to meet your monthly expenses post retirement and this is with a step up now just just highlight I just wanted to highlight what would be the difference if you do not opt for a step up if you do not opt for a step up in 20 years you'll be able to withdraw 6x it's a rough calculation you will be able to withdraw 6X in a step up you are able to withdraw 10x so that's the difference with a simple Step Up of a 10 000 rupees where we have taken an example of 500 rupee step up over a year so how does the UTI pragati sip works I've just given some scenarios the first scenario is of a 10 000 rupee per month sip with a step up of 1000 rupees per year the other one is without a step up we have taken an average cagr of about 12 percent for illustrating this example in a 20 year period a 46.8 lakh rupee investment corpus with a step up grows to about 1.4647 crores and you can withdraw 10x which is about 10 1 lakh which is about an 8.14 percent now I would like to highlight here for the specially for the MFD fraternity the last column the last column mentions infinite the first two if you look at the first two rows which is which is eight years ten years this kind of withdrawal can sustain for 27 years each from 12 Years onwards it is for infinite what that in effect means is that investors AUM is lying with you for an indefinite period of time and that is something which keeps on accumulating Trail at whatever rate might be existing at that point in time so this is a very powerful tool to build up the corpus foreign investor for their post retiral years and also retain that invest that AUM for your uh for your returns again scenario three scenario four this is this is the last scenario was a step up for thousand rupees this is a step up for just 2000 rupees and scenario 4 gives you a instead of 10 000 rupees sip we are looking at a 20 000 rupees sip why I'm just taking these scenarios is to just highlight a simple a very small increase in the Sip amount or a simple step up in the Sip amount how much difference can it make to the overall Corpus and therefore the return so if you look at a scenario three where ten thousand rupees with a 2000 rupees step up in 20 years your Corpus grows to 2.20 2.0 2.02 crores whereas it was roughly 1.47 crores with a step up of 1000 rupees and with a withdrawal amount of 10x which is 1 lakh rupees the withdrawal rate roughly is about 5.92 instead of a 8.14 which again means that the Corpus retained by the distribution fraternity is much much higher as compared to a step up of 1000 rupees similarly if you look at scenario four where we have a 20 000 rupees sip over a period of 20 years the Corpus goes to about 1.83 crores now just if you look at it 20 000 rupees for 20 years versus 10 000 rupees with a step up of 2000 rupees gives you a higher Corpus in the latter case as compared to the 20 000 rupees so anyway so twenty thousand rupees per month without a step up leads to a wealth accumulation of roughly about 1.8 crores uh and uh with with a withdrawal of about 7.83 percent still leaves you with enough Corpus to maintain the AUM for infinite period of time now while the previous examples was based on a kegger of about 12 percent here we are looking at a example where the kagger has been toned down to about 10 percent wherein we have again scenarios for 10 000 rupees with a 1000 Step Up per year for 20 years the overall AUM goes to about 1.2 crores and for 31 years this sip continues to service that investor and the MFD fraternity uh for a for a further period of 31 years the eligible schemes for UTI pragati we have a whole lot a lot of schemes in equity hybrid index categories also the solution category we have so we have a whole lot host of schemes where the pragati Sip can be done the gamut right from you know sectoral funds to large cap to Diversified to you know mid cap small cap flexi hybrid so the whole gamut of equity funds are available to start a pragati sip again just for uh you know just for illustrative purpose and if we take the Nifty index and if you do a back calculation from December 20 2000 if you look at a eight-year accumulation phase for the nifty 50 index with a monthly sip amount of about 10 000 rupees we find that while the investment amount is about 13 lakh rupees the investment value at the end of five eight years becomes about 20 odd lakh rupees and this is this is on Real Time data it's a back tested data in the withdrawal phase if you are withdrawing 2x of the Sip amount which is about 20 000 rupees so while you withdraw cumulative swp of about 33.6 lakh in a period of about 14 years the current value even after 14 years the current value of the investment is at about 41 lakhs okay so so you are still having a corpus of 41 lakhs for that investor which is staying in your AUM to generate revenues for you so that's the power of this pragati sip ok so again if we look at an ATR sip without step up so the last example was with a step up of between 2001 to 2008 this again is from 2001 to 2008 but without a step up you still retain a corpus in the same method you still retain a corpus of about 38 lakh lakh rupees of that investor as part of your AUM which generates Trail for you so why choose UTI pragati sip you are Building Wealth for regular cash flow both for the investor as well as for yourself it's an easy solution a lot of smart features you have sip swp which aims to secure your financial Independence wide ranges and wide range of schemes whether it is inequity whether it is hybrid with index Solutions there is a dual benefit of you know wealth accumulation through sip there's a flexible investment tenure as well ah so you have the product labeling here but one thing that probably I would like to add in this presentation is if you look at the tax implication of the withdrawal amounts that are there for the customers it's a phenomenally taxing efficient product because when you look at an swp it works on the fifo methodology which ensures that the capital gains is taxed at the long-term capital gains and it will be an extremely tax efficient so that that particular slide got missed out but if you do the rough calculations we'll be happy to share that with all of you if you do the rough calculations extremely extremely tax efficient method to sort of uh to sort of withdraw Investments that have been accumulated over a period of time so thank you for your patient hearing and here's to a lot of wealth creation from all of you thank you very much