Over the past few years, a debate has been raging in the financial circles on how to solve the problem of distribution and sound financial advice in mutual funds. The main issues involve the conflict of interest between intermediaries and investors.
It is well established that financial products are complex and opaque (in most part) and most investors need assistance in the form of advice. Intermediaries in the Indian context can be broadly classified into advisers and distributors. The latter being those who earn commissions from the fund houses, while the former charge the investors for advice.