The MF industry has something to cheer about. Non-renewal of ARNs is seeing a decline. Close to 3,400 IFAs did not renew their ARNs in FY 2015-16 as compared to 4,700 IFAs who exited mutual fund distribution in FY 2013-14.
The industry has witnessed a decline of 11% in attrition of mutual fund distributors which is a good sign for the growth of the MF industry.
AMFI data shows that attrition also declined among corporate distributors. This category has witnessed attrition of 216 ARNs in FY 2015-16 against 293 in FY 2014-15 and 341 in FY 2013-14.
Experts are of the view that the growing acceptance of mutual funds among investors has helped the reduction in attrition. They said that due to the increased awareness about mutual funds, many investors want to invest in mutual funds. And if demand grows, there has to be a strong supply chain to cater to investors, they added.
Swarup Mohanty, CEO, Mirae Asset attributed this decline in attrition to strong conviction of distributors in MF products. “Advisors have confidence in what they are distributing. Also, a lot of investors have understood the power of compounding from long term investments. We have seen success of SIP story. All this has happened because of IFAs. The attrition of a few IFAs ensures that only serious players remain in the MF business.”
Further, AMFI data shows that over 15,260 ARNs were renewed last fiscal. Of these, over 11,300 ARN renewals were from the individual category. In FY 2014-15, 12,300 ARNs were renewed.
As on March 2016, the mutual fund industry has over 1.45 lakh ARNs of which 71,000 are individual and 74,000 are employees. All these distributors are KYD complaint ARN holders.
Currently, distributors have to undergo a mandatory six hours of class room training in order to renew their ARN. To ease the ARN renewal process, NISM has introduced an online CPE training for distributors. Once distributors appear for this training they are issued a certificate.
Distributors have to send their certificates to CAMS along with a DD of Rs.1,500 in favor of AMFI as renewal fee. Typically, the entire ARN renewal process takes around two months.
AMFI is said to have been planning to introduce an online ARN renewal facility for distributors to expedite the ARN renewal process. The proposed online renewal facility is expected to reduce the total turnaround time to a few days. Distributors have to renew their ARN six months prior to ARN expiry, which is valid for three years.
