The Association of Mutual Funds in India (Amfi) is likely to introduce voluntary guidelines, in line with the market in the United Kingdom, that will help protect retail investors interest.
H N Sinor, CEO of Amfi said on Wednesday at the CII Mutual Fund Summit, ?The voluntary guidelines are still in the process and nothing has been finalised and it is too early to comment on it.? He added that, distribution is still a grey area and that Amfi proposes to start regular conversations with independent financial advisor (IFA) community once every three months.
During the day-long event, the main point of discussion revolved around bringing distributors back to selling mutual funds. After the ban on entry load since August 2009, large number of distributors and IFAs had stopped selling mutual funds due to a lack of adequate compensation.
The PWC mutual fund report which was released on Wednesday highlighted the fact that, minimal incentives for intermediaries to sell mutual funds led to investor losing out on investment opportunities. Banks, however, sold aggressively leveraging on their distribution network and by increasing reach and awareness for MF products.
V Ganesh, CEO at Karvy Computershare said, ?Distributors who are in direct contact with investors need to be empowered. This will be a positive step for the growth of the industry; over 86% of the inflows come from distributors.? He added that while distributors should be rewarded adequately for selling, he also rubbished the notion that IFA?s don?t make money selling mutual funds. His estimates put the average income of an IFA at R57,000 per annum.
Industry players who attended the event felt that, going forward there should be a shift from transaction-based fee model to an advisory-based fee model for the better development of the mutual fund industry. ?There should be an advisory model and that is the only way to get more people to participate in the mutual fund industry,? said Jaideep Bhattacharya, group president and CMO at UTI Mutual Fund.