More than investor now it is forced choice to distributor.

Very Nice article.

VERY GOOD WHY REGULATOR DOING THIS TYPE OF REGULATION ? THEY THINK HOW TO DESTROY THE IFA CHANNEL .IS REGULATOR CREATE LOTS OF JOB FOR THIS HUGE EDUCATED POPULATION .

It is v true that major earnings come from only the top 10 to 20% and this helps us seevice the balance clients also. But no one has thought of the cost a distributor incurrs before he or she actually finds a client who would become top 20%. Those who frame such rules should have qualifying criteria of actual on the job work experience for at least 5yrs and should have collected and retained at least 5cr aum for with which is at least 1500 days old on average. Then they should qualify to set rules sitting in their office chairs and pen and paper news and abuse. Till then they should stop passing such irrational rules. THEY CRY THAT such n such has been the model in x or y country but keep mum when they have to answer the other facilities avaliable to citizens of that country.. quality medical n schooling is free why not have same parameters in india before thinking of such bright solutions in a market like India. Any answers to these questions from them ????

It is better that SEBI stops all the brokerages, & see what happens to MF industry. Let IFAs take brokerages from Investors directly & let the MF AUM go down by 80% at least.

It is true that 80%of our retail clients are subsidised by the top 20% HNI base. Also as is true in insurance distribution the conversion ratio might be 1:5. What about the prospective clients that we diligently continue to educate even though they havent become investors. Who will bear the cost of the time and effort spent on meeting many more prospects than investors. The regulator seems to be overzealous in protecting investor interest thereby adding to the so called "Trust deficit" that is so regularly quoted without example by them. The plethora of choices given to the investor as well as regular media opinion on direct option, Robo Advisors and ecommerce platform should be sufficient for protection requirements which eliminates the need for crude disclosure norms as suggested by SEBI. Hope better sense prevails else the IFA community should get ready for rebating as is the norm in the insurance industry.

Thanks Ashish, well explained & well said.

PROFOUND!!! I believe the regulator and industry captains are overwhelmed by ‘its human psychology to make simple thing complex mentality.

MF industry has already too much of transparency, if such regulations will be implemented then it will impact on the overall business . New advisors will think twice before coming to this industry .The commission has been reduced in recent times and it is difficult to sustain in non metro cities on this business in initial years. The client is more concerned on what you receive rather than how much his fund has grown. Rightly agreed with Nikhil that let the regulator go in field and bring a SIP of even 1000 rs.

With less than 3% penetration in the industry, both regulator and AMCs are scouting for flawed business models based on assumption. I would be surprised what will happen if the penetration goes to 20% My personal view are: 1.MF industry has grown primarily on B2C model and not B2B with a typically personal relationship between IFA and client. 2.AMCs should disclose the total cost breakup in the CAS (amcs overheads detailed,brokerage).This will have total clarity. Just showing brokerage in cas doesnt make sense. I am very sure, this will not only kill the distributor fraternity but ensure consolidation among AMCs if implemented. Distributors should join together and air their views.

Great article. It perfectly puts forward the role "80/20" plays in IFAs business. It seems that most of these measures are aimed at offering "fair deal" to well informed or "eager to invest" investor. Issue of increasing penetration of mutual funds is completely ignored. As any IFA will vouch; it takes tremendous initial effort to convert traditional investor to MFs & this effort is cross subsidized by existing HNI investors.

Continued......... I replied the following: Sir, Serious concern: Excessive information is injurious to financial health. Do you know what is my job: To keep your emotions under control so that you cannot jeopardize your future finances. Just relax. You may call me at night but we will discuss intolerance in the country but not your finances. In the night he replied: DONE! HAVE CONFIDENCE. Now, regulator can guess the level of financial understanding of a well placed individual like him and AMC scheme is going to be sold on e-commerce platform. It will be disastrous for all the stakeholders. This is all I have to say.

I totally agree with Mr Ashish Modani s views. Yes, 80-20 rule is very practical in any business. Why doesnt the regulator understand it? I would like to share yesterdayss (10.2.16) experience with my senior level private sector executive clients. His SIP is running since 2006 in two folios and AUM has grown upto 50 Lac. Yesterday he whats app. me the following:- Serious concerns: Noticed reduction of 4 lac last month from total basket. Should we opt for LIC one time premium scheme? Will speak tonight. Note: My client got every month consolidated statement from CAMS to his email id like any other MF client. Continued.........

Seems the regulator is simply not concerned about increasing industry base.They are more adapt at tinkering around with regualtions.Would like to challenge one of the regulators to come and spend hours to get a Rs 1000 SIP done and then the realisation will come

Very well said ashishji , Retail will ultimately enter on top via robo advisors and exit at bottom as the market rules says, no one will hold their hands as viability will not come with the kind of regulation coming which are more bent towards manufacturer.

A retail business is still based on very hard work field, as most of the investors coming in MF has almost no knowledge about the basics of investment (LT) or (ST). When a distributor comes to closer of any business I hope all the part is well discussed with clients but as usual business ethics (other than MF) there should be some part in womb or else it will only distract in taking the right decision, giving more chance to rise unethical practice with more pass-outs & negotiation on commissions.

Very perfectly explained. Retail will be the real loser.They will not be able to afford fees. Currently clients believe their advisor when they explain benefits of long term investing and hold for long term. What will happen after the disclosures. Looks like regulator wants money to stay in financial assets for short term. Already distributors are very less and only mf distributors are becoming CFP and RIA gradually as they believe and have been taught financial planning. Such a shortcut will not ensure more RIAs in the long term. If mf distributors will reduce who will become CFP and RIA. Catch any new insurance agent and ask him about CFP or RIA or any insurance agent who sells only insurance. If someone can put these data to the regulator about how many RIA were hardcore mf didtributors/CFPS and how many hardcore insurance agents maybe it will open their eyes.

Thanks Ashish. Concept of cross-subsidy and demerits of DIY explained in such a subtle manner. Hope there is someone who can explain this to the regulator so that some sanity returns to the industry and the existing eco system of the industry is not disrupted further.