Question on everyone’s mind is how many investors will opt for Direct plan
As the SEBI mandated deadline for introduction of Direct plan gets closer, fund houses have started mentioning ‘direct investment’ plan in their Scheme Information Document (SID) of their open end schemes. “Most of the AMCs have started publishing direct investment details in their SID as it is going to be applicable from 1stJanuary,” said a senior official of a top fund house.
According to the SID of a top AMC, if investors want to route their investment through direct, he has to strike off ARN/Code of a broker/IFA/sub-broker/ distributor section in the application form. The applicant has to mention ‘direct’ or ‘not applicable’ in ARN code section.
According to the new rule for existing investments – whether done through lump sum or SIPs, investors can transfer their accumulated unit balance held under existing plan (through lump sum/ systematic investments made with or without Distributor code) to Direct plan. Investors will have to switch /redeem their investments (subject to applicable exit load, if any) and apply under Direct plan.
Investors who had registered for Systematic Investment Plan facility prior to 1st Jan 2013 with distributor code and wish to invest their future installments into the Direct plan, can make a written request to the fund house. The AMC will take at least 15 days to process such requests and switch the investment into direct plan.
Many distributors are concerned as they feel it could impact their AUM and clientele base which they have developed over the years.
“It is a big threat for perpetual SIP of 10,15,20,25 years which we have already started with clients. Clients can easily shift to direct by writing a simple letter and all our efforts to build the clientele is wasted,” says Ramesh Bhat of IFA Galaxy.
Dhruv Mehta of FIFA feels investors may switch to Direct plan once they take advice from advisors. “Direct investment could lead to a lot of existing investors who have taken advice shifting to the direct class after taking advice,” said Dhruv.
Some IFAs are worried that this might sweep away a large chunk of HNI investors. “HNI investors are well aware about market and investment. This route is beneficial for HNIs who can manage their own investments,” says Pradeep Agarwal, IFA from Kolkata.
Others strike a more confident and optimistic note. “If investors value your advice, they will take your service. It is not possible for investors to constantly track their investment,” said Vinod Jain of Jain Investments.
