SEBI concerned about the muted response to direct plans

Everyone is aggreeing the roles played by the distributors, except SEBI

What does Distributors do
1) Meets the client
2) Understand his needs and requirements of the clients
3) Educate the clients about the availablity of Financial Products
4) Tells the clients the most suitable products for the clients along with the features of the products
5) Also tell him the investments horizon for the prodcuts
6) The product is bought by the client
7) Monitors the performance of the products and Explains the developments to the clients. Many a times the financial products travels through different market cycles and this makes the clients nervous and doubtful about the products, about the advisors and about the issuers of the prodcuts (AMC)
8) The advisors explains the importance of the time, value and money. At times he
has to take the clients travel through times i.eshows him the past performance in bad or struggling phase of the economy.
9)Since he is knowledgeable and has good market knowledge and has good years of experience.
10) At regular intervals , the advisors invest their time in Training and developments, this empowes him and implments the same in their businesses. Which gives good returns to the client and them.
11) At times, the regulators and related agencies only sees the Comissions growth over a period of time. But failed to see, the efforts.
12) Advisors are wellwishers of Clients as well as the Mutual Fund Company. They act as a connecting points or grivances cells and tries to re-establish the relations between clients and AMC
13) They contributes to the economy through employment generations in their sectors related sectors. Tries to give positive messages about the economy.
14) Post the launch of direct schemes, propective clients calls the Distributors, takes the knowledge about the products or try to understand the product. And goes and invest directly with AMC or Through RTA and avoids the distributor or advisor, just to save the commission. But fails to undestand the roles of Advisors or distributor.
15)when Economy passes through such difficult phase of economy, then these half knowledged clients gets scared and removes their money and creates more volatily in the markets.

Even our respected PM Shri. Narendra Modi had acknowledged the roles of wealth Creators from Red Fort on 15th Aug.

Few lines addressed by PM Shri. Narendra Modi,

Wealth Creation is a great National Service.
Let us never see wealth creators with suspicion.
Only when Wealth is created, Wealth is distributed.
Wealth Creation is absolutely essesional. Those who creates wealth are India's wealth and we respect them.

AMC or Regulators do acknowledge the distributors roles but the same doesn't their policies.

May god bless wisdom and stop the DIRECT PLANS IN MUTUAL FUNDS, INSURANCE ETC.

Lets come together, join our hands work shoulder to shoulder to prosper our economy so that all the stakeholder do well.

Happy Investing through Adviors/ DIstributors

Direct plan was only introduce, to take IFA business in AMC control...

Excellent explanation.....Share it all....

JAAGO SEBI JAAGO

I agree with you sir .
And this is realistic things happen and SEBI has closed his eyes on it.

You are hired to benefit investors not corporates. Your duty is to safeguard investor's interests not corporates. All your moves are for maximising AMC's profits so you are not fit for your job. So get the he out of this job.

I think both direct & regular plans should coexist in a Democratic country like india as monopoly results in exploitation of customers/investors.There is a large percentage of investors who are educated but don't want to take the pains reading /understanding various fine prints of mutual fund investing & prefer to invest based on other's advice.Another category is that of less educated ones who will always need an advisor.The third category is that of investors who are eager to gain knowledge of mutual fund investing as they have lot of time (such as retired/ voluntarily retired )for their investment of hard earned money & thus can save/earn a bit more by investing at their own through direct plans.
Most of the criticism of Mr.Ajay Tyagi sir who is doing a commendable job seems to be out of frustration as earnings of advisors etc is getting hampered by introduction of direct plans.Advisors at time insist for unnecessary churning of portfolios based on their knowledge of things which can involve human error.
So far as the after sales service is concerned, it is unfortunately not up to the mark in most of the cases like in after sales of other products in our country. Preference is always given to new customers to grab a new business.Also,there is a possibility of recommendation of less rewarding products if a fund house runs some promotional schemes to sell their products.
Any issue should be looked at in a holistic manner instead of always thinking of ones own interested.

Perfect Sugestion.
I also apeal to sebi for promote regular plan for growing mf industries and also creating self employment.

Absolutely right sir

How would a formal demarcation by SEBI (between Distributors and Advisors) help the cause of Direct plans?

Her are the steps. Formal Demarcation of Distributors vs Advisors will lead to Many distributors adopting RIA route as Formal Demarcation would mean Distributor is not an Advisor. I re-iterate, Distributor is not an advisor. Official Demarcation would be followed by Such campaign, articles. Automatically, many distributors would turn to RIAs. As RIAs proportion goes up, AUMs of credit risk funds, equity savings funds, high risk debt funds would drastically fall. Refer returns of Kotak Low duration + FT ultra short bond fund in direct and compare with other debt funds in this category and you will understand. What will increase is the % of ultra short bond funds, low duration mixed credit debt funds, ETFs, index funds, focused equity funds. This will happen because a true advisor is motivated to offer good product at lower price. Exactly what SEBI's Chief is looking to achieve as mentioned in this article.

Mr.Kamal, request you to kindly visit the rural areas or B30 cities and see if investors are ready to pay fees for the advice. People do not pay to doctors for the health check ups. Do you really think that the investors from B30 cities invest in mutual funds after knowing the concept?

Most of the Investors give their hard earned money by knowing the distributor and not the mutual fund scheme. He do not understand the technical language of the market. Investors prefer nearest bank deposits. Even after 72 years of independence more than 50% of Indian population do not have LIC policy even if LIC is safe. Do you really think after knowing the market risk, investor himself puts money in mutual funds? It is the distributor who visits investors and collects the investments. It's not easy to derive money from anyones pocket.

Please check the ground reality.

Investors will reward distributor's good service with continuation of investments. Most of them are ready to let go the 1% odd extra returns of direct plans for the distributor service. If we can demonstrate that we are working in our investors best interests we will be rewarded with our investors patronage.