Industry sees 51% fall in new ARN registration

The financial year 2019-20 did not end on a positive note for the MF industry. The latest AMFI data shows that the industry witnessed a steep 51% fall in the number of new MF distributors (MFDs). The industry added 8,594 new individual MFDs last fiscal compared to 17,625 in the preceding fiscal. 

Industry experts feels that the MF industry’s target of achieving of Rs.100 lakh AUM by adding 4 lakh new distributors in five years will get more difficult. “New commission regime and rationalized TER have discouraged many individuals from MF distribution as a career,” said Swarup Mohanty, CEO Mirae Asset.

George Heber Joseph, CEO & CIO, ITI Mutual Fund says that the last one year of capital markets has not portrayed a rosy picture for the MF distribution business. “There has been a massive sell-off in equities in the last one year due to the slowdown in economy, NBFC crisis, US-China trade war among other reasons. All this has affected the minds of new professionals aspiring to enter this business. Also, existing distributors generally bring in new clients into the business but today they do not see this as a lucrative business given the stringent regulatory norms,” he said.

Talking about how the industry can add new distributors, George says that AMFI should offer ARNs to CAs, ex-bankers and other highly qualified professionals without any certification exams and fees. These professionals understand the financial markets better and may find it attractive in the long run.

Jimmy Patel, MD & CEO, Quantum Mutual Fund believes that frequent regulatory changes and the highly volatile market conditions have affected the confidence of new comers. “Many professionals have decided to become insurance agents instead of MF distributors. In fact, life insurance industry has added 1 lakh new agent last fiscal.”

AMFI data further shows that the industry saw a decline in new registration of corporate employees as well. The industry received 32,022 new ARN registrations from corporate employees as against 37,048 last year.  

Overall, the industry added 41,501 new distributors in April-March 2020 as compared to 55,955 last year across all categories – individual, corporate employees and new cadre. As on March 2020, the total number of individual distributors stood at 87630.