SEBI wants more disclosures from AMCs

The Do-It-Yourself (DIY) world of finance is much closer than we thought. On March 18, 2016, Securities and Exchange Board of India (Sebi), the capital market regulator gave more power into the hands of the mutual fund investor to make better decisions. Now funds will disclose information about the tenure of the fund manager as well as the holdings of the portfolio in the Scheme Information Document along with name, designation and remuneration received by all employees who receive an annual income of Rs 60 lakh or above working with the mutual fund.

But the killer blow comes in the part where the amount of actual commission paid by AMCs to the distributors or the agent will be fully disclosed in the consolidated account statement given to the investor. The commission will also include all the foreign trips or gifts or rewards received by the agent.

Abhimanyu Sofat, co-founder of advisesure.com, a financial advisory company feels that transparency is a good sign but investors will not look at numbers or commissions that agents are getting in good markets. “All these disclosures and salaries that fund managers are making will be ignored as long as the fund is outperforming. Advisors or intermediaries will face problems during bad market periods when funds under perform. And there will be some explanation that will be required from the financial advisor”, he says. He feels that the DIY customers are very few in numbers and the rest of the market needs advice.

The DIY models of Motif Investing and Betterment in the USA are in a position to service investors who want to do investment as a DIY model that exactly suits their individual profiles. Here people are ready to pay high fees as advice. Sofat feels that advisors in India will have to give a lot of value addition if they need to survive in this market.