The MF industry has witnessed a steep decline of 57% in addition of new IFAs this fiscal. Latest AMFI data shows that the industry has added only 5,709 new IFAs in April-November 2019, as against 13,273 in the corresponding period in 2018.
Experts feel this could lead to a slowdown in the MF industry’s growth. In September, a report by AMFI-BCG noted that adding 4 lakh new distributors in next five years will be crucial to achieve Rs 100 lakh crore AUM.
The change in MF industry’s commission structure is seen as a major factor for the decline in new IFA registration. In September 2018, SEBI banned upfront commission and asked AMCs to shift to an all-trail model to compensate mutual fund distributors. Moreover, the recent regulatory changes in TER structure may have had further impact on the industry’s attractiveness for new distributors.
In a telling sign, the new ARN registrations of IFAs has declined steadily post October 2018.
Month |
Addition of new individual ARNs in 2018 |
Addition of new individual ARNs in 2019 |
November |
1,047 |
605 |
October |
1,261 |
615 |
September |
1,906 |
706 |
August |
1,858 |
687 |
July |
1,791 |
713 |
June |
1,979 |
724 |
May |
1,832 |
786 |
April |
1,599 |
873 |
Total |
13,273 |
5,709 |