As investor needs evolve and competition intensifies, MFDs are increasingly finding that a pure distribution model may not be enough to stay relevant. The shift towards holistic wealth management is emerging as both a necessity and an opportunity.

This allows MFDs to deepen client relationships, expand their service offerings, and future-proof their businesses. Amit Shah, Founder and CEO of Wylth, shares why it makes strategic sense for MFDs to take this leap into wealth management.

Amit received the NRI Award in 2016 and has also been honored with the annual Udyog Ratan Award, which recognizes contributions to the economic development of the country. Nishant Patnaik, Associate Editor, Cafemutual, moderated this session for MFDs.

Wealth Managers vs. MFDs

The basic difference between an MFD and a wealth manager lies in mindset and approach. MFDs focus on product distribution based on the client’s risk profile and suitability.

A wealth manager, on the other hand, must offer holistic financial solutions, including tax efficiency, estate planning, insurance, retirement planning, and intergenerational wealth transfer.

In this sense, an MFD is like a pharmacist, while a wealth manager is like a physician crafting long-term wellness plans. A wealth manager is not just a product provider but also a partner in overall financial well-being.

Why should MFDs venture into wealth management?

While MFDs are well placed in their businesses today, the world around them is changing rapidly. There are three major reasons why MFDs should consider transitioning to wealth management:


Investor expectations are evolving: Investors now expect personal engagement, digital experiences, and holistic financial advice.
Fee compression and product commoditization: MFD fees, currently around 1%, may reduce to 0.75% to align with global standards. Going forward, MFDs will be expected to offer differentiated products.
Regulatory shifts and competition: Earlier, MFDs mainly competed with banks and fellow distributors. Today, they also face competition from fintech platforms, DIY models, and fintech-led brokers. To stay competitive, MFDs must raise their game.

Importantly, the evolution of MFDs into wealth managers is not about abandoning what already works. Instead, it is about future-proofing their businesses. Wealth management practices can help MFDs build deeper client relationships.

How can MFDs develop a wealth manager’s mindset?

It starts with shifting perspective from being a product provider to becoming a solutions partner. Though easier said than done, these steps can help:


Understand the client’s life goals, not just investment goals.
Initiate conversations around legacy protection and financial independence instead of focusing only on SIPs. SIP is merely a means to achieve end goals.
Focus on advice, empathy, and ongoing reviews. Clients rarely leave due to lower returns but often walk away due to a lack of empathy during tough times.
Invest in knowledge, including taxation, retirement planning, estate planning, and behavioral finance.
Embrace technology.
For MFDs, venturing into this segment is not about becoming a financial planner overnight but about evolving step by step into a trusted financial partner.

Essentials for establishing a wealth management practice

Key elements include:


Client segmentation
A robust advisory framework
Strong product architecture
Seamless compliance and documentation
Quality technology infrastructure
Tools, Support and Costs Involved
According to Amit, the transformation process is neither very difficult nor very costly. The key requirements include:
A good digital CRM
Proper risk profiling and goal-based planning
Model portfolio building to ensure consistent and process-driven advice
A query-based grievance redressal system
Digital communication tools
Training and community support

As for cost, setting up a complete wealth management practice may appear expensive, but in reality, it does not require massive investment or additional office space. With Wylth, MFDs can get a full digital setup for just Rs. 25,000 plus GST.

The real investment, Amit believes, lies in time, intent, and commitment to upgrading the client experience.

Is wealth management relevant for retail-focused MFDs?

In Amit’s view, the retail segment requires wealth management the most. Retail investors may not have crores today, but they have aspirations, responsibilities and anxieties that require proper planning and advice.

As their wealth grows, wealth management becomes about preserving family culture and values. Today’s retail investors are tomorrow’s affluent clients and the day after tomorrow’s multi-millionaires. After all, most billionaires come from humble beginnings.

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