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Guest Column 20 years of distribution, Rs.20 trillion of assets, but less than 2% users

20 years of distribution, Rs.20 trillion of assets, but less than 2% users

If penetration is what industry wants, then it must welcome SEBI's investment advisory consultation paper.
Kamal Manocha Jul 25, 2017

Mutual funds are one of the best ways to accumulate, preserve and park wealth. Investors can save on taxes and let their money work for them by generating better risk-adjusted returns over other asset classes.

Currently, the MF industry has over one lakh distributors (20,000 active though), hundreds of online distributors and banks that sell mutual funds through their large networks.

Clearly, the product per se, its past performance, target market, sales and distribution channels - all are in favour. However, still penetration of mutual funds is abysmally low. Even with the AUM of Rs.20 lakh crore, the penetration of mutual funds is hardly 2%.

To understand the reason for low penetration, firstly, we should admit that the MF industry is neither facing a problem of sales and distribution strength nor unattractive commission structure, as both these factors are quite conducive.

The industry first needs to understand that distribution strength plays an important role in only making the product available; however, beyond a point, the industry can achieve mass penetration once people start investing in mutual funds on their own.

The industry believes that they can increase penetration by leveraging its distribution strength. So far, we are yet to see the results.

In my view, the industry needs to change the perception of mutual funds to make it a mass financial product. And, this is where the gap is. Investors expect to get unbiased advisory services while dealing with their so called advisors. But when commissions drive business, it creates a gap between expectation and delivery. Thus, from consumer’s perspective, industry lacks the creation of a perceived value at a mass level. This perceived value gap is an ‘Advisory Gap’.

Filling this gap is utmost important, and for this, advisor needs to be segregated from agent. This way, financial advisor gets recognition as a professional whose advice is neither free nor driven by product commissions. When investor understands that his advisor does not represent any company and works for his best interest with the fiduciary responsibility, he starts perceiving the same advice with more involvement and seriousness.

Another reason that the industry claims for low penetration is the lack of financial knowledge. However, the original issue is not the knowledge, but the perception. There is famous quote in this regard by Leonardo Da Vinci, ‘All our knowledge has its origins in our perceptions’. Advisory, if segregated from distribution would fill this perception gap and this would lead to flow of knowledge simultaneously.

Hence, if penetration is what industry wants, it must welcome SEBI's investment advisory consultation paper where the regulator has given professional stature to investment advisors.

Instead of running away from the proposed change, the industry must understand the power of a perception for the product that an advisory approach can bring in.

If banks, large distributors take the initiative in this regards, it will create a huge ‘perceived value’ for the product and once this happens, there will be a shift in the flow of saving from traditional products to mutual funds.

Lastly, the fear that investors will not pay a fee for advice is just a myth. If investors will get value, they will pay fee. From buyers' perspective, paying a price for an offering is not just a cost related decision; it is more a value related decision. As Warren Buffett once said, ‘The price is what you pay and the value is what you get’. Therefore, the perceived value of a registered advisor is going to command its price.

With commission based distribution model, buyers will always be cautious and the perceived value gap will exist. This way, industry will grow only incrementally and penetration will continue to be a cause of concern.

If SEBI promotes investment advisory in a big way, there will be a competition in delivering the advisory and not just sales, and this will create a positive perception about the product at a mass level. And, in that scenario investors will be more confident and less cautious in their buying decisions, which is when the penetration will increase.

Kamal Manocha is the Chief Executive Officer of Bharosa Advisor, a SEBI registered investment advisory firm.

The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.

43 Comments
S.VENKATRAMAN · 1 month ago
One of my friends is a leading Doctor and earns income which crosses 30% slab and pays approximately 1.5 lacs income Tax. His Auditor who is also good friend of mine files his return for the last 15 years . Initially Auditor charging Rs 500 to 3000 , Now he asked for Rs 5000 fees for current year, The Doctor complained and asked me whether i can change the auditor as he is increasing fees. This is the tendency of even Educated one. In this condition If an advisor ask for fees, the investor will not turn up next time. Without Advisors advise the industry would not have witnessed this much Growth. Quantum Already tried to market their product directly, Till today they could not achieve even 1000 crore mark, See the growth of Mirea asset, Kotak, Sundaram, Mahindra they have made tremendous achievement with the help of IFA'S. SO SEBI Counsultative paper against the industry and IFA.
V A Prabhu · 1 month ago
I totally agree with Mr Venkatraman. I did a survey with my 300+ clients. Less than 5% are willing to pay fees. In fact some new clients are asking if they can opt for direct option and yet expect me to service them !!! India has to go a long way till acceptability of fees come in.
Kamal manocha · 1 month ago
Are you asking fee over and above regular plans? Are your old clients who are are denying fees aware of the magnitude of hidden fee they are already paying. Pls make them aware, if they are not, and then offer direct plan option + advisory fee.
Reply
Rajiv Rahalkar · 1 month ago
I don't agree with views of writer.the life insurance industry with lakhs of full time Agents and now,online policy bazar etc.can achieve a penetration of 13-14 % only.Remeber ? What happened last time when SEBI stopped upfront commission in 2008-09 ? The business plunged by 60%in one year.In USA Advisors charge 1%of AUM per Annum.Are Indian investors ready.more important,whether SEBI will allow it ?.
kamal Manocha · 1 month ago
1) Last time when business plunged 60% after SEBI stopped upfront, then how come it picked and became 5 times in less than 10 years?. It is because of SEBI's initiatives of abolishing upfront loads.
2) If IRDA would have been as tough as SEBI and would have reduced sales and distribution expenses, insurance penetration would have been 100% by now as it is a need based product.
Worse part is, out of 13-14% penetration, most is in ULIPs which are both low in returns and low in sum-assumed. How many ULIPs will you buy for your friends and family? pls reply with utmost honesty. I will wait for your response.
3) Who says, india cannot charge 1% fee. Come-on, almost every equity fund have around 1% hidden already. It just needs to be transparent. It all in mind that investors won't pay. If they won't pay, it means either fee needs to be reduced or value needs to be enhanced.
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K.V.Raghupathi · 1 month ago
Dear Mr Kamal Manocha,

Kindly offer your email and mobile, so that I will connect to you to explain what the ground reality for the industry and the distributors. Hope this is not a sponsored article.
kamal Manocha · 1 month ago
kamal@bharosaclub.com. Most welcome. Send me a mail and will share mobile number if needed.
Reply
Swapan Das · 1 month ago
Mr. Manocha, it seems that you are not at all willing to spread the MF industry to the villages, rather you want that only your business to grow. India is not in a position to pay fees for financial advice. Crores of people even do not consult a doctor for medical advice. They either do not take modern medication or take self medication which is very dangerous. Open your eyes, come to the ground level who didn't even know what is Mutual Fund. We, Distributors, are proactively trying to bring them in the MF investment platform. But you are only catering service to them who understand why mutual fund investment is better than other investment options. Unfortunately more than 90% people in India do not know what is Mutual Fund. Are you ready to proactively serve someone who do not know what is Mutual Fund and ask your fees from him?
kamal Manocha · 1 month ago
1) What percentage of your AUM comes from villages? Would you like to answer. Come on, with less than 2% penetration, mutual funds have only penetrated to HNIs and Corporates and not even towns with retail population has been covered. Do a survey in your own office and colony and find out results and then reasons.
2) For distributors who really manage large number of small investors, like you as you said, do not need to adopt advisory. But, that doesn't mean advisory is bad. Banks and Large distributors must adopt. Fiduciary makes one advisor. No fiduciary, No Advisory.
3) Advisory with fiduciary is going to benefit industry as whole, like all past changes have..
nishikant · 1 month ago
Appreciate u that atlast u accept MFDs are required in this industry. what is the contribution of RIAs & Direct plans in 4500 crore equity sip book & steady inflows of small investors which has counter balanced FIIs monopoly in markets ? please first give some credit to the MFDs that they have brought this industry to these levels. but i know nobody is going to reward MFDs, instead 18% GST is imposed on already thin brokerage to eliminate them by misinterpreting the laws.

Advisory profession is not mere based on certification. more than certification it needs integrity, ethics, honesty, transparency. many IFAs are working from last 10 - 15 years with these values. its not easy to win faith of investor for such a long period. IFAs r in this industry only because retail investors trust him more than Bank RMs, stock brokers & even after the introduction of Direct plan majority of them r still with the IFAs.









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Hari Om · 1 month ago
Guest writer seems you have very little knowledge about how things work in reality.
Kamal Manocha · 1 month ago
This is interesting. Please tell me how things work in reality? Are clients made aware of the year or year hidden fee they pay? Are client made aware of the conflict of interest distributor carry?
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K RAJESHWAR REDDY · 1 month ago
The above 6 comments clearly reflects the pulse of the Industry.
Fee only and commission based is a debate which is going on for a long time. My question is , why a commission based IFA mis-sell the client? He never does it.There is a mutual benefit for both the parties.If Clients AUM increases, naturally the revenue increases for the IFA. MUTUAL FUND is the only product where there is a payout on the existing fund value.So the IFA takes care of it in a long term perspective.This does'nt happen with other financial instruments.And with FEE only option, there are lesser chances of it.
kamal Manocha · 1 month ago
Hand-holding is good, and required, but it is always one to one, and hence cannot help penetration. Beyond a point, perception about the product is required for it to reach masses. Professional stature of Advisory helps build Perception. Free things are never taken seriously. Fee makes advisory a valuable product. Once, perception will be there, investors will be urged for self - knowledge. From push oriented hand-holding, advisory along with distribution will create a good perception and consequently a mass level pull for the product. Distributors will make the product available to fulfil the demand. It may look impractical to all of us, but, that true with every change and innovation.

Even if mis-selling is rare, a single case spoils perception. All good effort of hand-holding done one to one with large number of clients goes for a toss, with a few mis-sells as it adversely impacts the perception. With commission based advisory, there is bound to be a mis-sell as there is fundamental conflict of interest. Advisory with fiduciary law is needed.

Trail commissions are good till the time large investors aren't aware of the compounded impact. IFA does take care of it, no doubt, but, is investor aware of the price he is paying for the care he is getting. So, IFA should continue with disclosure.
nishikant · 1 month ago
When the bulls are incharge & the market making new life time highs everyday, it looks all very rosy,easy & simple to talk about the perception of the product & all that. MF are subject market risks, no matter what certification u got, u can not move the markets as per ur wish. Majority of Indian retail investors are very risk averse, they can not digest negative returns. they will happily pay 1 lac premium in Traditional LI or even invest in dubious chit funds but can not tolerate notional loss in MF.

Sahara, Sarada, PAN card club, Samrudhi jeevan, local co - op banks, societies, High charges ULIPs & all other dubious means looted people only bcoz our market regulator is busy in calculating TER so that MFDs would not get benefited. mean while all these companies looted the innocent investors as Regulator & AMC never tried to penetrate into the hinterlands.

Even new entrant Microfinance Banks has opened branches in small cities & towns in just few months, but MF industry is still struggling to penetrate.

3% - 4% equity investors after 20 years shows that regulator is focusing only on TER & AMCs only on their profits except UTI. They never made any serious attempt to reach to common people. it is the small distributor who kept faith in the product & served small investor against all odds.

When the portfolios of investors becomes red & shows 15%, 20% losses even in SIP after a bear market of 3 - 4 years. will they pay us advisory fees at that time ??

How will u set up Fee based advisory when there is No CAMS, Karvy or AMC office in your city to invest in Direct mode ??

How much u charge for SIP of 2,000 or 3,000 Per month ??

Will u give your valuable time to a new investor who don't know anything about MF or Equity markets but wish to start SIP of 2,000 ??

How will we survive in bear markets ?
Kamal Manocha · 1 month ago
You are sharing 3 aspects:-

1) Markets have risk and customer's are largely risk averse and this is the reason for low penetration
2) There are other products apart from MFs, where expenses are much higher
3) RTAs and Systems are not ready to support advisory models
4) Why will investors pay fees in bear markets.

My response

1) This is because of advisory gap. Investors invest in equity at a PE of 22+ and FMPs at PE below 18. Manufacturers support this
Kamal Manocha · 1 month ago
Continuing...

As manufacturers produce FMPs in bearish markets and Equity NFOs in rising market. This is because, in falling market, FMP are easy sell and in rising market Equity is a easy sell.

Given this huge Gap, how can there be a consistent good experience. Hence, investors are also use to feeling good in rising market and bad in falling markets.

Real stuff would have been if advisor would have taken a pain of sticking to fundamentals. But, its not possible u less there is change in mind-set.

If we see this change - perception will change and there will be a flow of knowledge simultenously. This will lead to flow of savings from traditional products to mutual funds on its own.

No where this means distributoship not be there. Its quite important to make products available especially for the smaller investors.

But, there be both advisory as well as distributiorship with complete disclosures for new as well as old investors to select the suitable path.
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Vinay kumar laxman · 1 month ago
Cafemutual should first avoid biased articles like this. I believe this is an unbiased platform and should be left like that for the good of the subscribers. In Bangalore, I have tried fee based model. However, less than 5% of the clients are willing to pay fee and these are the facts backed with numbers. Not just my opinion. There is nothing wrong from the client point of view because in India people are not yet used to the idea of paying fee for financial advise. So, I don't blame the clients for this. We should understand this first before making comments that clients are ready to pay fees. And quoting Buffet about price and value is very funny in this context and doesn't seem apt. Mutual funds is a specialised market linked product where clients need handholding through out the investment period. So, assuming that clients can invest on their own with our advisors help is very very wrong. Even advisors are learning every day. Known is a drop and unknown is an ocean. In Markets its not about Financial IQ, but more about emotional IQ. Whatever the author thinks or assumes is a myth and whatever he feels as myth is the truth. Again I request cafemutual to avoid such biased articles and check the facts before publishing
aKANSHA · 1 month ago
Vinay,

Firstly, its a democratic country and everyone is free to express views. Your statement seems like you are taking it too personally. It is people like Kamal who are promoting to embrace the change in the right spirit. The question if it would work or not will come later. However, are we really making any efforts towards this is my question. I think the article is beautifully written and its a sham to call the writers view a myth. Disappointing to see that people are not willing to open up to the change. He did not mention that a distributor is any less than an Advisor, he just says that there should be a clear segregation so that the advice given is unbiased.

India is in its initial stages of this change but I am pretty confident that we will get there!
kamal Manocha · 1 month ago
Vinay - No one is saying Advisor is not required. Direct plans are not meant to be self-subscribed. Direct funds are to be complemented with fee based advisory. If your client's value your advice, they cannot deny you paying fee. Disclose them the annual commission loss and then offer direct+advice. In any case, disclosure is mandatory.

Ganesh Kumar Gupta · 1 month ago
One of my friend had a talk with Bharosha team and they tried to misguide me on commission issue by quoting filmsy amounts.
Kamal Manocha · 1 month ago
Pls elaborate. You can refer commission calculator. Or your get Free portfolio check done.
Ganesh Kumar Gupta · 1 month ago
One girl from your 'esteemed' office explained to me that distributor are getting 20% commission. You and your office are misguiding public to grow your own business.
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Yashi · 1 month ago
Brilliantly written article!
Sunil Kumar · 1 month ago
Dear Mr Kamal Manocha,

Penetration of mutual funds in India is very low just because of no one ( Regulators & Policy makers) has given attention to this industry. I M not agreeing with your view , India is still not ready for fee based structure. Penetration is very low , even educated people require hand holding in the initial stage. I request you to go through the ground reality before giving judgmental statement.
Shalini · 1 month ago
Mr. Kumar, Completely agree with you, but try and understand that is what kamal is proposing. He says that if proper advisory, hand holding and guidance is given, will help in growing the industry. People will become more confident with the decisions,
Today, people dont invest because they have less knowledge, hence advisory comes in picture.
kamal Manocha · 1 month ago
Sunil ,

1) Regulators abolished upfront loads which are first contested, eventually helped growth of AUM from HNIs and Corporates.

2) Since, Jan 2013, Regulators are trying to bring in perceptual change for the product category and has been inviting distributors to take up "advisory stature", but it is distributors who are again contesting and avoiding.

Yes, regulators should have not waited for 4.5 yrs and should actually made RIA mandatory for Banks and large distributors much before. Trust had this been done before, there would have been changes in the cost structures all products be it MFs, Insurance, AIFs etc till now.

If advisory is separated from distributorship, there is no reason so high sales and distribution expenses in MFs and Insurance etc..

But, matter of time.

Change is inevitable, it has to start from MFs..and spread to other products..

Thanks
Reply
Jay · 1 month ago
Cafemutual se bharosa uthta ja raha he. Eyse bharose-mand logo ka article publish kar ke.
Ashish · 1 month ago
Rightly said, I think investors will start paying the advisory fees, the moment they realize the amount of commission they have been paying to their so called "Advisors"
This is an eye opener.

KD · 1 month ago
A student after 20 years of EDUCATION, 90% OVERALL MARKS BUT 2% PRODUCTIVE IN JOB---WHAT WILL BE THE END RESULT?
If industry replace such people with more productive people then obviously they will panic and may try to show your MARKS. But what is beneficial for industry? Clearly, Gap between Marks and productiveness is because of EDUCATION.

It's very simple to guess, who is well educated then distributors.


I hope distributors got my and writer's point.
Swapan Das · 1 month ago
Mr. KD, and Mr. Manocha,
Please find out 10 people fromany background who have not yet invested in any mutual fund, ask them that you want to advice them about mutual fund, then ask for a fee. Thengive your expert comment. It is very easy to advise and ask for a fee from those 2% investor who have already tested mutual fund. But come to grass root level , convert a new comer to an investor asking with a fee, then give your expert comment please.
Kamal Manocha · 1 month ago
You are right and i agree with you. No where i am saying that there be only fee based advisory. sebi also acknowledges this, i am sure. Consulation paper basically proposes 2 critical changes:-
1) Advisor be segragated from Distributor. This doesn't mean, distributor goes away. This means, those distributors who want to evolve as advisors or advisory firms could adopt this route. Banks and large distributors whose clientele is HNIs are the one's who are being talked here.
2) There should be disclosure of commission expense
Kamal manocha · 1 month ago
Continuing ..

2) and a disclosure that distributor has a conflict of interest

Let investor decide - fee+conflict free route or commission+non conflict free route
Nishikant · 1 month ago
The fact is that the RIAs wants readymade fruits without nurturing the plant. plant which is nurtured by IFAs from 20 years & now giving sweet fruits of huge AUMs & SIP book. Now everybody is jumping to get it whether it is AMC or RIAs by eliminating IFAs using different tactics.

Investors who becomes mature & aware with the efforts & hand holding of the Distributor over the years will be prospective clients of advisory model. I am sure 70 - 80% of their client will only be from existing 2% investors. Advisory will increase the penetration is just a illusion. They will go for low hanging fruits instead of making effort to find fresh one.
Reply
Swapan Das · 1 month ago
Mr. KD, and Mr. Manocha,
Please find out 10 people fromany background who have not yet invested in any mutual fund, ask them that you want to advice them about mutual fund, then ask for a fee. Thengive your expert comment. It is very easy to advise and ask for a fee from those 2% investor who have already tested mutual fund. But come to grass root level , convert a new comer to an investor asking with a fee, then give your expert comment please.
Sanjeev. C. Bhatkar · 1 month ago
In our country , fee-based Mutual Fund service will not be accepted. It is IFAs only who will be true advisors who have so far done commendable penetration of mf products through their arduous efforts educated and brought traditional savers into mf industry. These people prefer to stay with these IFAs (like me ) and as a result bhave become long-term investors in mf. As rightly pointed out by those (who are not supporting seggregation ) distributors, big institutional or big distributors ( who are advocating fee-based distrbution through so-called advisory services ) are least interested in entertaining any indivdual fresh prospective investor. In reality they are opportunistic in snatching such small investors who have just begun to understand mf investment from their IFA who brought them in mf. In fact these big advisors manage to get small-investor data from AMCs ( no one should ask me here if I have any evidence of this. ). These big distributors are also expert in telling wrong thngs about IFAs who brout those small investors to mf. People who are supporting fee-based mf distribution are not aware of ground reality about anticipation / expectations of fresh mf prospective investors. They are deliberately attempting to show wrong picture to AMFI and SEBI about how fee-based model will benefit one and all (small distributors , small investors and whole mf industry ). These attempts should thwarted by IFAs by making elaborate presentation to SEBI. I appreciate all those who have protested views of those who have advocated fee-based mf distribution.
Sanjeev. C. Bhatkar · 1 month ago
In our country , fee-based Mutual Fund service will not be accepted. It is IFAs only who will be true advisors who have so far done commendable penetration of mf products through their arduous efforts educated and brought traditional savers into mf industry. These people prefer to stay with these IFAs (like me ) and as a result bhave become long-term investors in mf. As rightly pointed out by those (who are not supporting seggregation ) distributors, big institutional or big distributors ( who are advocating fee-based distrbution through so-called advisory services ) are least interested in entertaining any indivdual fresh prospective investor. In reality they are opportunistic in snatching such small investors who have just begun to understand mf investment from their IFA who brought them in mf. In fact these big advisors manage to get small-investor data from AMCs ( no one should ask me here if I have any evidence of this. ). These big distributors are also expert in telling wrong thngs about IFAs who brout those small investors to mf. People who are supporting fee-based mf distribution are not aware of ground reality about anticipation / expectations of fresh mf prospective investors. They are deliberately attempting to show wrong picture to AMFI and SEBI about how fee-based model will benefit one and all (small distributors , small investors and whole mf industry ). These attempts should thwarted by IFAs by making elaborate presentation to SEBI. I appreciate all those who have protested views of those who have advocated fee-based mf distribution.
Sanjeev. C. Bhatkar · 1 month ago
In our country , fee-based Mutual Fund service will not be accepted. It is IFAs only who will be true advisors who have so far done commendable penetration of mf products through their arduous efforts educated and brought traditional savers into mf industry. These people prefer to stay with these IFAs (like me ) and as a result bhave become long-term investors in mf. As rightly pointed out by those (who are not supporting seggregation ) distributors, big institutional or big distributors ( who are advocating fee-based distrbution through so-called advisory services ) are least interested in entertaining any indivdual fresh prospective investor. In reality they are opportunistic in snatching such small investors who have just begun to understand mf investment from their IFA who brought them in mf. In fact these big advisors manage to get small-investor data from AMCs ( no one should ask me here if I have any evidence of this. ). These big distributors are also expert in telling wrong thngs about IFAs who brout those small investors to mf. People who are supporting fee-based mf distribution are not aware of ground reality about anticipation / expectations of fresh mf prospective investors. They are deliberately attempting to show wrong picture to AMFI and SEBI about how fee-based model will benefit one and all (small distributors , small investors and whole mf industry ). These attempts should thwarted by IFAs by making elaborate presentation to SEBI. I appreciate all those who have protested views of those who have advocated fee-based mf distribution.
Sanjeev. C. Bhatkar · 1 month ago
In our country , fee-based Mutual Fund service will not be accepted. It is IFAs only who will be true advisors who have so far done commendable penetration of mf products through their arduous efforts educated and brought traditional savers into mf industry. These people prefer to stay with these IFAs (like me ) and as a result bhave become long-term investors in mf. As rightly pointed out by those (who are not supporting seggregation ) distributors, big institutional or big distributors ( who are advocating fee-based distrbution through so-called advisory services ) are least interested in entertaining any indivdual fresh prospective investor. In reality they are opportunistic in snatching such small investors who have just begun to understand mf investment from their IFA who brought them in mf. In fact these big advisors manage to get small-investor data from AMCs ( no one should ask me here if I have any evidence of this. ). These big distributors are also expert in telling wrong thngs about IFAs who brout those small investors to mf. People who are supporting fee-based mf distribution are not aware of ground reality about anticipation / expectations of fresh mf prospective investors. They are deliberately attempting to show wrong picture to AMFI and SEBI about how fee-based model will benefit one and all (small distributors , small investors and whole mf industry ). These attempts should thwarted by IFAs by making elaborate presentation to SEBI. I appreciate all those who have protested views of those who have advocated fee-based mf distribution.
Sanjeev. C. Bhatkar · 1 month ago
In our country , fee-based Mutual Fund service will not be accepted. It is IFAs only who will be true advisors who have so far done commendable penetration of mf products through their arduous efforts educated and brought traditional savers into mf industry. These people prefer to stay with these IFAs (like me ) and as a result bhave become long-term investors in mf. As rightly pointed out by those (who are not supporting seggregation ) distributors, big institutional or big distributors ( who are advocating fee-based distrbution through so-called advisory services ) are least interested in entertaining any indivdual fresh prospective investor. In reality they are opportunistic in snatching such small investors who have just begun to understand mf investment from their IFA who brought them in mf. In fact these big advisors manage to get small-investor data from AMCs ( no one should ask me here if I have any evidence of this. ). These big distributors are also expert in telling wrong thngs about IFAs who brout those small investors to mf. People who are supporting fee-based mf distribution are not aware of ground reality about anticipation / expectations of fresh mf prospective investors. They are deliberately attempting to show wrong picture to AMFI and SEBI about how fee-based model will benefit one and all (small distributors , small investors and whole mf industry ). These attempts should thwarted by IFAs by making elaborate presentation to SEBI. I appreciate all those who have protested views of those who have advocated fee-based mf distribution.
S.VENKATRAMAN · 1 month ago
First the Writer should come out with Data that How many of RIA"s are successful for the last 2 to 3 years?. We can not compare our profession with Lawyers and Doctors as the Patients and Clients go to them out of some problems or compulsion. So they charge according to their status in the society. Here only 2% of the population have invested in MF and only 8% are rightly insured. Tomorrow if IRDA comes out with the same fee based model, After 4 or 5 years insurance growth will go to negative figure. The author should not argue for the sake of argument. He should understand the ground reality. Still both MF and INSURANCE are push products, The customers are to be educated and this has to go long way. Online channel , direct marketing and lot of other things are there but still they prefer personal interaction which we are doing.
Sanjeev C. Bhatkar · 1 month ago
I agree totally with S. Venkatraman who has alpropriately illustrated about difference between mf / insurance service and other professions and has given hint about the aftermath if at all fee-based Advisory is forced on mf distributors.
VISHAL VASHISHT · 1 month ago
I THINK FIRST SEBI MUST ASK OR DO A SURVEY ONLINE OR THROUGH SMS BASED SERVICES
TO ALL EXISTING CUSTOMERS ABOUT FEES TO BE PAID. I DON'T THINK ANYONE (EXCEPT FEW EXCEPTIONS) IS WILLING TO PAY FEE. PENETRATION IS LOW....... FINE........... BUT FACT OF THE MATTER IS THAT IF IFAs (the backbone of industry) ARE TAKEN CARE OF, THEN ONLY THIS INDUSTRY WILL FLOURISH IN PENETRATION TERMS. ELSE SUBJECT ON PERSONAL FINANCE BE ADDED TO OUR EDUCATION SYSTEM RIGHT FROM BASIC LEVEL.
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