AMFI has entrusted PricewaterhouseCoopers (PwC) to suggest measures to increase the number of distributors.
In fact, AMFI has constituted a working group comprising two board members Vishal Kapoor, CEO, IDFC MF and Prathit Bhobe, MD and CEO, Tata MF. PwC along with the working group is expected to come out with a white paper that would suggest ways to increase the number of IFAs and make MF distribution an attractive and appealing career option for individuals.
In a letter sent to MF CEOs, AMFI has acknowledged that the India has abysmally poor per capita distributor to service investors. AMFI said, “While the aggregate number of folios is over 8 crores, the number of individual MF distributors currently registered with AMFI is just over 83,000… and this number would be far lesser, if the number of inactive distributors is factored in. Thus, the per-capita number of individual MF distributors (or IFAs as they are commonly referred to) vis-à-vis India’s population of 1.34 billion is woefully small, especially when compared to the insurance sector, which has reportedly more than 2.2 million insurance agents.” A rough calculation shows that India has one IFA for every 16,200 people.
In addition, the recent regulatory changes in TER structure may have further impact on the industry attractiveness for new distributors, said AMFI.
AMFI believes that the increase in number of distributors can help the MF industry achieve inclusive growth. AMFI said, “While the MF Industry has witnessed impressive growth in the past 4-5 years, experts believe that there is a great potential to double the size of the industry both in terms of AUM and number of customers in the next 4-5 years, by increasing the customer base and investments from tier II/tier III cities through distribution reach.”
Higher penetration of MFs will need many more active, individual distributors, especially in smaller cities and towns, said AMFI.
