While the detailed regulations are still awaited, Cafemutual spoke to a cross section of IFAs. Here is a summary of the positives and negatives as perceived by them
Positives
- Cash transactions of up to Rs 20,000 will help MF industry get wider investor participation
- Additional 30 basis points (0.30%) increase in total expense ratio will help MFs tap rural markets – commissions expected to increase for business from locations outside top 15 cities
- Fungibility in total expense ratio will help AMCs manage their costs effectively – some of the savings expected to be passed onto distributors
- Opt out facility at a product level will make things easier for IFAs
- NISM and AMFI registration fee reduction and simplifying registration process bring cheer to IFAs
- Introduction of varied levels of certification and registration depending on products & services offered will make life simpler for IFAs.
- Product labelling will help ascertain fund suitability better
- Allowing MFs under Rajiv Gandhi Equity Savings Scheme (RGESS) will open up new avenues
Negatives
- Introduction of a direct plan with a lower cost structure will encourage investors to go direct and hence seen as a threat
- Financial advisors are in a fix over the new investment advisors regulation. Some say the requirements may be too onerous
- Exit loads will be credited to the schemes. This means AMCs will claw back commissions if the event of early redemptions
