‘Distinguish MF advisory biz from selling’

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Mumbai, Nov 30: Intermediaries in the mutual 7fund (MF) industry can play an important role in expanding the investor base. The roles of the agents, distributors and advisors have to be extracted fully by the industry players.

PGR Prasad, CEO, SBI MF, said: “The role of intermediaries in bringing retail investors to the MF fold has to be fully exploited. Intermediaries tend to view each investment as merely a transaction rather than a long-term relationship. This is further compounded by their inadequate knowledge of the financial markets that leads to mis-selling.”

Mr Prasad was participating in a panel discussion on Distribution and the Role of Private Banks and Financial Planning Within India at the two-day conference on Funds World India 2004 in Mumbai.

The aspect of mis-selling, among others, was discussed at length by a group of industry representatives like Sashi Krishnan, CEO, Cholamandalam AMC; Anil Chopra, CEO, Bajaj Capital; Ramu Chakravarthy, financial adviser, Morgan Stanley; Devang Shah, CEO, Rights Return Financial Planning and Mr Prasad.

Eminent panelists, while vouching that financial planning is a must, agreed that today every distributor of financial products is not necessarily a planner.

This is why a fear of mis-selling persists. There was a consensus that the businesses of ‘advice’ and ‘selling’ must be distinguished, but questions were raised as to where the financial planner earns from.

In India a paradigm shift is needed here, the panelists think, as most investors are not used to paying a fee for the financial advice they receive.

Mr Shah felt that only when planners are able to achieve set targets as to give the correct advice to their clients, would the clients take care of them, and compensate them for their services. “Only a financial planner is adequately equipped to save an investor from making a financial blunder,” Mr Shah added.

Moderating the session, Ranjeet Mudholkar, CEO, Association of Financial Planners (AFP) in India, pointed out that investors are faced with a challenge of having to choose from among the myriad of financial products as market forces continue to expand.

These developments have brought about an increasing demand for professional advice that caters to the investment needs of the investor.