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Why should MFDs suggest SIPs

Why should MFDs suggest SIPs to their clients?

  • June 26,2025

Summary

Systematic Investment Plans (SIPs) have emerged as a powerful tool for building wealth, both for investors and mutual fund distributors. With benefits like affordability, financial discipline, need-based investing, and SIP top-ups, they not only help investors achieve their financial milestones but also enable distributors to build a stable, scalable, and long-term business. Read this blog to find out in detail how promoting SIPs can help both mutual fund distributors and investors!

As the wheels of progress are turning and the nation is moving towards a Viksit Bharat, the Indian mutual fund industry is playing a vital role in the country’s progress. In the last 25 years, the industry AUM has grown from Rs 1.04 lakh crore in May 2000 to Rs 72.20 lakh crore in May 2025. A major contributor to the growth of industry AUM is systematic investment plans (SIPs) in mutual funds. The total SIP contribution in the financial year 2016-17 was Rs 43,921 crore as compared to the SIP contribution of Rs 2.89 lakh crore in the financial year 2024-25, reflecting growing trust of investors in disciplined, long-term investments. (Source - AMFI)

SIPs in mutual funds allow investors to start investing with fixed amounts at regular intervals. With SIPs, investment becomes more affordable for investors as they can start investing with small amounts and increase their investments gradually as their income grows and conviction strengthens. Promoting SIPs as mutual fund distributors can prove to be a win-win situation for both distributors and investors; investors benefit from rupee cost averaging and the power of compounding, while distributors benefit from a loyal client base and regular income. Let’s look at some reasons why distributors should focus on promoting SIPs to their investors to emerge successful - 

  • Need-based investing - With SIPs, distributors can promote need-based investing among investors. By understanding investors’ financial needs, risk profile, financial position, and investment horizon, distributors can suggest viable SIP investment options and the required SIP amount, which can help investors fulfil their financial needs in a timely manner. Moreover, distributors can help investors map each one of their SIPs to their financial needs, such as retirement, their child’s education, and the purchase of a home. This makes investing more purposeful and helps clients stay committed to their long-term financial needs.

  • Financial discipline - SIPs instil a habit of regular investing among investors, thereby making them disciplined in their long-term investment journey. SIPs automate the investment process, helping clients stay committed to their long-term financial needs without being influenced by short-term market volatility. This consistency and discipline empower investors to build wealth steadily over time, without getting swayed by market conditions.

  • Builds long-term relationships - Through SIPs, investors commit to regular investments and aim to stay invested until financial needs are fulfilled. This long-term connection helps build strong, trust-based relationships with clients, as they become partners in helping fulfil long-term financial needs. As clients see progress, their trust deepens, leading to higher retention, increased investment, and valuable word-of-mouth referrals.

  • SIP top-ups - As investors’ income increases, distributors can promote increasing their SIP on regular intervals by adding an SIP top-up. This top-up feature would allow investors to keep their SIP contribution in line with inflation. Moreover, it would help investors to fulfil their financial needs at an accelerated rate. On the other hand, this allows mutual fund distributors to build a stronger and more rewarding AUM base.

  • Accessibility - SIPs can be started with as low as Rs 100, making it accessible to retail investors. The low barriers to entry make SIPs a convenient and attractive investment option through which anyone can start building wealth. This also means that distributors target a larger pool of clients and build their AUM gradually over time.

  • Stable income - SIPs provide a steady flow of AUM. This means MFDs can enjoy regular and consistent trail commissions, enabling them to build a sustainable business with greater financial stability and long-term growth potential.

To conclude, promoting SIPs in mutual funds is not just a win for investors, but also for distributors alike. As India’s financial landscape continues to evolve and investor awareness deepens, MFDs have an opportunity to play a more strategic, consultative role by guiding clients not just in choosing funds, but in building lifelong financial habits. SIPs are the perfect gateway to this transformation. By championing SIPs, MFDs don’t just distribute products, they shape mindsets, drive financial inclusion, and contribute to the nation’s journey towards becoming a financially empowered Viksit Bharat.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.