Financial Planning myths vs facts: Expecting guaranteed returns from market linked schemes is a recipe for disaster, says Abhik Sanyal of DSP Investment Managers

Our experiences tell us that the investors tend to pay attention on details and learn only when something goes wrong. It could be a market crash or drop in funds’ NAV (Net Asset Value) due to any reason. Therefore, building right intent at an early stage is a challenge, Abhik Sanyal, Senior Vice President & Head Consumer Marketing at DSP Investment Managers tells Shivendra Kumar in an exclusive interview. The SVP decodes various myths associated with financial planning and challenges the industry is facing towards changing these. Edited Excerpts:

Q) In your view, what are the biggest myths or misconceptions on financial markets among investors in India?

The biggest myth to my mind is that ‘it is all easy money’ out there be it in the stock markets, cryptocurrencies, or any other financial instrument. This get-rich-quick attraction has given rise to the need for instant gratification, which, in categories including mutual funds is simply not possible (or will work by pure luck if it ever does).

Investments are now happening digitally and the ability to buy and sell in one or two clicks has created an ecosystem where investors are unwilling to wait. Trigger-happy individuals with incomplete knowledge, in many instances are in a notion that they possess information at their fingertips.

Financial brands have the responsibility to tap into this desire and ambition, to educate and guide investors on how to take informed decisions and not just end up being product peddlers trying to take advantage of the misconceptions investors may have.

Learning to invest rightly is not rocket science and if one has the intent, energy and the ambition to do well, picking up skills on how to invest is not difficult.

Q) What are the challenges of the industry in reaching out to the potential investors?

The first big challenge is intent. Our experiences tell us that the investors tend to pay attention on details and learn only when something goes wrong. It could be a market crash or drop in funds’ NAV (Net Asset Value) due to any reason. Therefore, building right intent at an early stage is a challenge.

Personal finance is personal and no one can be forced to learn about it. It can improve only if you have the desire to learn. Regular communications or handouts from your fund managers are just not enough.

The second challenge is attention. How do you capture the attention of an audience who is bombarded with marketing messages from thousands of brands which may have left them desensitised.

The third challenge is more behavioural. Humans have the desire to apportion good outcomes to themselves and bad ones to others or to the environment. The test is how do you help people recognise the impact of their own behaviour on the outcomes they could earn and help them feel like they’re in more control? How do we make them realise that past performance belongs to the past and that they should not get swayed by just ‘the best fund returns in the last 1 year’? This is a big one!

The fourth one to make people understand the importance of diversification of portfolios, that you need risk management, you need balance and fixed income to also add stability to your portfolio.

Many MF brands have been trying to address these challenges and with the help of AMFI’s (Association of Mutual Funds in India) 'Mutual Funds Sahi Hai' campaign and the rise of digital channels, a big difference has already been made over the past few years.

But with less than 3 per cent of India having ever invested in mutual funds, there’s a long way to go.

Q) Data suggests smaller cities have seen a higher growth in demat account additions over the past two years. As a company, what strategies have you employed to reach out to potential investors?

The behaviours exhibited by investors are similar whether they are in the metros, mini-metros or smaller cities. Their appetite for investment and need for information has shown comparable zeal. However, the mistakes made by investors in big cities and smaller ones are not different. We often notice this in our conversations with finance-related influencers across social media as well as investors from across India.

Digital channels are economical and also allow us to connect and engage with anybody who wants to understand how to invest better. We will continue to use our wide reach here to connect with them, going forward, as well.

Q) We are witnessing a shift in investment strategies from safe but low returns investment avenues to risky but rewarding options? What should companies like yours do to tap the ongoing trend?

Without a doubt, letting go of traditional, ‘safe’ ideas to accept and try new ones, is great. There is a positive shift from traditional investment preferences like bank fixed deposits but with the potential to also leave people confused.

More so, the younger generation is embracing the idea of building passive income streams for themselves in more ways than one and letting go of traditional, ‘safe’ ideas that worked for the previous generations. The rise of digital channels, the ease of stock trading and proliferation of stock broking and crypto communication can be attributed to this trend in shift.

The problem is an expectation of same outcome vis-a-vis ‘guaranteed returns’ from safe instruments and market-linked products. This can cause a lot of heartache for these new entrants, if they haven’t fully understood the product they buy.

The catch is to not get caught up in the greed, or emotions of FOMO (Fear of Missing Out) but be able to understand ‘what’s right for me’ before jumping into anything with both feet.

The new entrants must be educated about setting the right expectations and understanding the risks involved with the market-linked instruments whether directly in stocks or via mutual funds.

We are utilizing our presence across organic and paid digital channels to reach out to this audience and play the role of a guide, with honesty, responsibility, and transparency as our guiding principles. This includes the hundreds of videos on our popular YouTube channel, our well-read blog as well as the creatives and content we release on our other social channels including Twitter and Instagram, where we engage with our investors daily.

The idea is to not be didactic but maintain relevance and style while connecting with this audience.

Our social media strategies especially the work we do on Instagram and the language in which we try to communicate, plays a lot to this audience as we believe this will be the game changing generation that embraces personal finance at an early age.

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Q) Any specific campaigns that DSP is planning to target its audience?

We remain nimble in our marketing plans and tend to not think too far ahead, given how frequently markets fluctuate. The core of our communication theme is to encourage rational, unbiased decision-making and help investors understand the common traps they could fall for while decoding risks or setting expectations. We help them in understanding different product categories and recognise the need for asset allocation by investing in fixed income, international strategies or passive strategies beyond just equities.

Our approach towards this is via creative-led campaigns or content-led campaigns.

One such campaign has been ‘Emotions of Money’. The endeavour has been to separate rationality in decision making from inherently emotional and personal connotations. Our collaboration with the team at 'India Film Project' proved to be the perfect fit with its community of creators who live for ideas.

We worked with IFP to build one of the world’s largest amateur filmmaking challenges-where teams had to produce and submit their short films in under 50 hours. Over 550 unique films were made on the theme ‘How does money make you feel?. The films showcased a wide range of emotions and this content strategy helped boost consumer participation and created digital interactions. This in return, helped DSP build relevance and cerebral engagement in the minds of the community.

We will continue to release more short movies on DSP Mutual Fund’s YouTube and Instagram channels every week.

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)