Today, I think the world of mutual fund intermediation can be summed up in this 2 X 2 matrix.
|
Model |
Regular |
Direct |
|
With fee |
Either the customer or the regulator is going to put an end to you! |
The future! |
|
Without fee |
Current distribution model. Stay here if you like to be a Dinosaur. |
You might be running a charity for sure! |
So, my friends, this is how I see the writing on the wall. In the near future, client will be your paymaster.
“Conflict-free advice - do you offer that?” will be a question clients will ask you. When a client asks - “Do you have a regulatory obligation to act in my interest?” either it sounds like music to your ears or it will turn out to be the Viaticum!
Challenges will come, rules of the games will change and the world may seem to be conspiring against you! However, would you become the Neo who found the truth? Do you have a Morpheus who can let you know the real meaning of what the world is about or are you surrounded by the army of Agent Smiths?
It is so fascinating if you compare our current situation to the Matrix. For those who have gone into deeper meanings of what the Wachowski Brothers conveyed through this movie, the very creations of human beings turned against them and these machines waged a war with the human race. We are made by our clients. If we don’t represent them, they will wage a war against us. And soon, you will have more statistics from AMFI stating that half the population is now investing in direct plans! Did you know that a whopping 15% of HNI and 12% of retail AUM has already shifted to direct plans? By the way, 12% of retail is around Rs. 74,000 crore!
This number is for real and the truth is also for real! For those who believe that Matix is a movie and there ends the story, I felt these websites offer a glimpse of Morpheus’ guidance! Watch out for the likes of www.unovest.co and www.invezta.com. This is just the beginning of a larger revolution to follow. Don’t just brush them off as websites…the deeper meaning to their existence is that your customers will soon wage a war against (you know who)!
I have created this excel sheet (Click here to get the excel sheet.) to help you come up with your own answers. This is a framework and you should force yourself to answer these questions. After this, look for your Morpheus. Help yourself find the truth! Be the Neo!
Read the first part here.
Rajesh Krishnamoorthy is Managing Director of iFAST Financial.
1 https://www.amfiindia.com/Themes/Theme1/downloads/home/T15-vs-B15-November-2015.pdf
2 https://www.amfiindia.com/Themes/Theme1/downloads/home/Individual-Investors-November-2015.pdf
3 https://www.amfiindia.com/Themes/Theme1/downloads/home/Industry-Trends-November-2015.pdf
The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.