Finance leaders stress on investor trust

Meeting in the backdrop of a controversy over mis-selling of financial products, regulators, asset managers and distributors agreed at an industry conference on Monday that winning and keeping the trust of investors are supreme.

Meeting in the backdrop of a controversy over mis-selling of financial products, regulators, asset managers and distributors agreed at an industry conference on Monday that winning and keeping the trust of investors are supreme.

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Simplicity of product design, effective communication design and increased financial literacy were critical, they said at the Financial Planning Congress 2010, whose theme was, “Regaining consumer trust—Role of regulators, industry and financial planners.”

“A simple product will be the biggest innovation and the challenge is to come out with them,” said K.N. Vaidyanathan, executive director, Securities and Exchange Board of India.

Subir Gokarn, Reserve Bank of India’s deputy governor, said financial literacy must be imparted to youngsters at an early stage. “It should become part of the school curriculum,” he said.

He said more and more savings were going into bank deposits without any entry load, underlining the feeling of safety associated with it among investors.

“Financial services run pretty much on faith and it evokes an emotional reaction in times of crisis,” said Ashu Suyash, CEO of Fidelity Mutual Fund.

“The role of the financial advisor or distributor will have to be aligned to investor goal and not manufacturers,” added Sundeep Sikka, CEO, Reliance Capital AMC.

While investors confidence is low, India is better positioned in terms of credibility of financial service providers, said C. Jayaram, executive director, Kotak Mahindra Bank.

“In the developed countries there is a huge loss of financial credibility but it is better in India because of steps taken by the Indian regulators,” he said.

“We need to put the client first and offer him the best suited product for him. Distributors should also keep investing in redevelopment of their skills,” said Anup Bagchi, executive director, ICICI Securities.