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ICICIdirect Posted on 03:47pm 16-Sep-2019

6 Reasons to Start Your Financial Product Business

The emergence of financial products as a preferrable investment destination has brought about a major change in the way a modern market functions. Instruments like bonds, stocks, IPOs, mutual funds, and fixed deposits have suddenly begun to gain a lot of popularity. 

Despite such a prosperous economic environment, a lot of investors often remain unaware about the basics of these financial products. The technicalities associated with their operation are not easily understood.  

This is why, a lot of people have started relying on businesses which can provide them with personalized attention, professional advice, and data-driven outcomes. Not only are such businesses tasked with acquiring, developing, and nurturing new/existing clients, but they are also required to guide their customers throughout the entire investment journey.

In the longer run, this leaves a massive opening for individuals to act as sub-brokers, distributors, investment associates who can offer customized, sustainable, and effective financial services.

Here are six major reasons to help you understand why dealing in financial products can prove to be extremely rewarding:


Increasing Depth of the Indian Market

The traditional investment options have not yet outlived their utility in India. Retail investors are still continuing to invest in instruments as varied as fixed deposits, recurring deposits, PPF, gold, endowment policies, and real estate. At present, the Indian household savings rate stands at a little more than 17%. Moreover, the demat penetration rate is barely around 3%. These numbers provide financial distributors with a great opportunity to tap into the Indian market, monetize it and bring it within the investment fold.


Low Set Up Cost

Getting into the financial products business does not demand any form of high capital investment. You can be a sub-broker right from the comfort of your home. All you need to possess is a computer, a phone, and a customer management system powered by a reputed agent.. The only costs incurred would be in terms of: 

  • Joining fees charged by the broker (usually below Rs. 5 Lac).
  • A refundable security deposit.
  • A one-time fee for providing support and collateral.
  • Product Certification for type of products one is interested to distribute. NISM (National Institute of Securities Market) conducts these examinations and provide certification to the aspiring distributors. The exams are conducted regularly at major cities Pan India. For Mutual Fund Distribution, one has to apply for an ARN number from AMFI (Association of Mutual Fund India) by registering on their site and paying some fees.


Few brokers provide a fully automated back-end process that can do away with the need to hire an extra office staff.


High Earning Potential 

Running on a commission based revenue model, the financial product business harbours a high earning potential. Your payouts are largely determined on the basis of the number of clients that you bring on board, the average client wealth, and the general frequency of their transactions. You are also free to take up either a comprehensive national distribution of all financial products or choose a single product range with different principals for each. Moreover, by developing a loyal customer base, you can conduct repeat transactions and earn from the investments which are made every month. In fact, if your broker provides a trail commission, you get to make an earning as long as your client remains invested in a product!


Scalable Business Model

In terms of size, extent, and geography, the model of this business is both scalable and sustainable. As most transactions are made online, clients from different time zones can be easily serviced. Furthermore, you can also remain in touch with your customers either from a single location or from multiple branch offices. This gives you the flexibility to accommodate their interests and to service them without any glitches.


Rising Advisory Preferences

According to research, almost 71% of Indian investors prefer to avail the services of a professional adviser. Although two out of three Indians are extremely confident about their investment decisions, they still choose to be guided by authorised associates. This is primarily because the credibility of qualified financial advisors coupled with their professional competence can help deliver long-term value. These rising advisory preferences ultimately give birth to a space where a transparent, steadfast and ethical relationship can be forged with multiple customers across the investment spectrum.


Understanding Customers 

Last but not least, a financial product business gives you the golden opportunity of serving your clients by constantly engaging with them. You don't just get to understand their long-term and short-term objectives, but you also get to guide them through the thick and thin of market conditions. The extensive reach and inclusivity of this business equip you to understand your customers and ensure their financial well-being.

If you too are looking to start a financial product business, ICICI Direct from ICICI Securities can offer a great starting point. You can become a business partner with ICICIdirect and gain access to their wide-ranging financial services for your clients. All you are required to do is to fill up your details on ICICIdirect Business Partner website as an authorized person, or investment associate. Representative will call you and for required documentation. Post approval, you can begin transacting through their multifaceted trading terminals.

As times are changing, more and more people have started diversifying their portfolios in order to reap the maximum benefits of a $2.1 trillion market. In such an environment, tapping into the power of a financial product business enables you to march towards the twin elements of competency and credibility, while growing from strength to strength. 


About the Author:

Mr. Max Menezes, Head Business Partners, ICICI Securities Ltd. has been associated with the company for more than 17 years and has played a key role in the launch of Business Partners Vertical.

The views expressed in the article are personal view of the author and do not necessarily represent the view of ICICI Securities.