Every Day regulator have to do lot of work for the Single Objective to Protect the Interest of Investors.All this was started bcos of Churning in the Investors Portfolio. My Simple suggestion that All Upfront should be abolished & only Trail ( Incremental ) should be added into the systemn.It will for the benefit all the stake holders ( Investors , AMCs & Advisors )As there will be no upfronting so there wont be any benefit for the Some Distributors to unnessary churn the investors Portfolio ( For their Own Benefit ).All trail benefit will initial have some hit for revenue but it will average out in Long Term & Win - Win situation for All Stake Holders.I think all trail model will direct the advisor to remain invested in MF for Long Period which in turn to deliver the Ideal Returnto them.

We can see that from Benchmark AMC house I think they have a direct selling mode.But you can understand from there assets size.Like without distributor mkt will not grow.Actually Govt not able to regulate properly and saying otherwise.This things happens in India when Govt not able to manage simply they ban it or dicard it or squeeze it. You can several example like that

I totally agree with Mr. Kanak Jain, IFAs across all regions need to come together and each region should get their representation probably as per market share.

Dear Sir, I think SEBI & AMFI both will hange until death to distributors. If they will continue this type of actions, it is time for us to think "Should we continue our Profession?". Because you cannot continue in a business/profession where you have no guarantee of future.I am residing in remote area of the country & already 80% of the IFA`s have stopped working in our area.Now it is time to rethink about continuation in this profession.

A divine intervention can spare the Mutual Fund growth ! Rural inflow may come, but when the market goes up,the FII & Institutions,will book profits. The rural investor will mostly depend on distributors , who may become elusive to safekeep their AUM. If Mutual funds are allowed to come up with regulated Pension Plans, then only a sane MF growth is possible. AN IFA DOES NOT MAKE THE MARKET GO UP BY BRINGING IN AUM.. THE RIGHT INVESTMENT POLICY DOES. URBAN INVESTORS ARE AWAITING TO SEE GAINS SINCE 5 YEARS,HOW LONG WILL YHE RURAL INVESTOR WAIT ???

I AGREE WITH THE POINTS RAISED IN THE LETTER. One new chapter of DIrect ivestor NAV will further creat more complications for normal investors. MANY OF THE MEMBERS HAVE EXPRESSED THEIR CONCERN ABOUT VARIOUS IFA FORUM AND NEED TO UNITE, VERY ESSENTIAL.

Dear Sir, All said and done. The Ball is in Regulator's court. Hope that sane minds will prevail and the right decisions will be taken to revive the MF industry and all the stakeholders are benefited .

Please send this correspondence to Prime Minister & New Finance Minister as they want to revive the industry & ask them about their views on SEBI's actions on this issue.

Dear sir All the text is very logical let us hope for better tomarrow regards balasubramanian

sir, as Mr.Jagadeesh (kochi ARN-75716) has rightly said, we need to have one voice. We have too many associations...FIFA, IFA Galaxy, KAMFA, etc. We need to project one single face for negotiations. SEBI is hell bent on removing IFAs by hook or crook. Direct mode with less expense ratio may actually hurt investors for lack of knowledge but as seen in practical life, the investor always has a excuse for 'his' wrong investment but never 'praises' the IFAs skill or knowledge when a investment makes good gains.

First and the foremost we have to have one voice & One Federation for PAN India IFAs. If we cannot sort out this issue SEBI would take IFAs for a royal ride. Take the case of LIC agents association which is very strong hence no major damage has happened to their revenue. Similarly its high time we need to sort out any differences or ego issues among the IFA associations or bodies who represent IFAs and should work towards forming a strong IFA Federation with PAN India representation in the governing body so that SEBI should not be allowed to take any unilateral decisions affecting our career or revenue.......I guess thats the need of the hour.....Whatever hardship we are going through now is because IFA fraternity is not strong. Let Mr Dhruv Mehta of FIFA take lead & invite all the IFA associations Office bearers of all the states sit together consult and build a strong IFA Federation. I am damn sure rest of the IFA issues should get resolved in due course.... All the very best

In continuation of my suggestions: For further compliance on the part of IFA (in particular Rural IFA), he can send all other relatied documents to CAMS/ Karvy/ concerned AMC once a week on every Saturday by Regd Post. In case of any NGO, there is always 'reversal code' method. The same 'reversal entry' can be applied in case 'CHEQUE' instrument is not tendered in time by the resposible IFA at rural branch of ICICI/SBI.Here I would suggest all forms should be computer generated and unique one irrespective of AMC, scheme nature etc etc. I know there is electricity cut in rural India in a big way. But,for the rural investor, MF NAV diffence in one or two days may not be harmful under normal mkt conditions. He may not mind for the delay due to lack of electricity/ internet at least for the time being. In any case, Central Govt has mega plans to percolate 'Broad band connection' across ALL OVER INDIA in coming months. Govt will have to tackle power generation issue on war footing.

Instead of adding 0.30 % expense ratio for the rural community, & re-introducing 'direct' business with lesser expense ratio without IFAs, I suggest 'The status quo' as of now!!!! Instead, I suggest following measurements to be taken to percolate Mutual Fund business in rural areas:Higher authorities to trasact business 'ONLINE' complusory using 'FINNET' on the lines of 'CAMS' timestamping method (trusted module) at IFA's own office in 'RURAL AREAS' ALSO !!! Basically there are three types of transactions namely 1)swith 2)redemption and most importantly 3) fresh purchase/ addl purchase in the same folio where ONLY ONE ADDITIONAL DOCUMENT COMES INTO PICTURE i e 'CHEQUE' instrument. If the some decentralised arrangement is done for the collection of the cheq instrument in rural areas also say by generating computersied pay-in-slip which will be tendered for clearing say either in ICICI Bank/SBI as most branches of these banks are CBS enabled having well established rural presence.

Any effort for the betterment of the IFA community all the IFA's should be together. But one important point I wish to share is- The decision of Direct or indirect is left for AMC's actually. All the AMC need to decide whether they want to have two different scheme of Direct and indirect. I hope most of the AMC will decide on the Option where they will be with the IFA's. An AMC wish to have a distribution channel or go direct is a decission to be taken by an AMC. But one thing is clear all IFA's should be united and Mr Ramesh Bhat(south) and Mr Bharat Bhushan(north) will have to take the lead.

Only some 15-20 IFAs attend our IFA association meeting in Vijayawada Every month now. Some 3 years back we used to have at least 50 plus active IFAs. Situation in the country at large is no different. Now this thing is not going to help the situation any way for IFAs. I am talking with the knowledge that IFAs are the most potent weapon in achieving the much wanted penetration. As such, we are worried with myraid problems like lacklustre markets, financial illiteracy of investors etc. In such a situation, why burden the workhorse with his existing investors(if not new ones ) deserting him for that 0.5% or 1%? extra? And one more thing- with the advent of new rules, there is every doubt that upfront commission may go away. IN such a situation, do you expect any level-headed new distributor to taking MF as his career? How much time will it take him to get a decent income? Has anybody thought about it in depth? Classic case of putting the cart before the horse again?God save us!

The IFA are still doing well in other countries around the word. I think the IFA will have a temporary set back till the Markets are down, When the economy slowed sign of Improvement, the Investor will come to IFA for Advice & service. & Distributor will charge for service rendered.

Mr.Mehta, direct was started earlier too with no success, indians are used to getting services. Besides if FIFA can't get the regulators to understand than who will? I think we need to have backup plans, are we going to adopt wait and see approach or are we planning to take concrete actions? Can't we file the PIL?

COMMENT STATED ABOVE Dhruv Mehta, Chairman, Foundation of Independent Financial Advisors IS TRUE. YOU CANNOT EXPECT DIRECT SALES IS CHEAPER THAN SALES ROUTED THROUGH DISTRIBUTOR(S). THE SALARIES,PERQUISITES AND OTHER AMINITIES PROVIDED TO DIRECT STAFF IS VERY MUCH HIGHER THAN MEAR COMMISSIN PASSED ONTO THE DISTRIBUTOR. THE STAFF COST BURDEN IS VERY HIGH ON THE MANAGEMENT OF ANY AMC. NOWNOW, SEE THE EXAMPLE DIRECT STAFF OF SBI & LIC. THEY HAVE BECOME BURDEN TO THE MANAGEMENT. BUT, ALSO I WOULD LIKE TO PUT IN POINT THAT ONLINE PURCHASE APPEARS TO BE CHEAPER BUT IT IS NOT THE SAME. YOU NEED TO HAVE INTERNET CONNECTION, COMPUTER AND CURRENT, THEN ONLY ONE CAN BUY ONLINE. INTERNECT CONNECTION, COMPUTER AND CURRENT ARE NOT FREE. WE HAVE TO PAY PRICE FOR THE SAME TO HAVE THESE FACILITIES. HERE, THE COST IS SPREAD OUT IN DIFFERENT SHAPES AND NOT VISIBLY DIRECTLY. WE END UP PAYING MORE INTERENET CHARGES, COMPUTER COST & BREAK-DOWN CHARGES AND ELECTRICITY CHARGES ALONGWITH TIME TAKEN.

When wise men & women of SEBI get together, they come up with such ideas which only the "wise" ones understand.Another wise idea from them. It seems they have no concern of the investors, who are supposed to gather information themselves on mutual funds schemes and go find an AMC office, or go online, & start investing!!!! This in a country where internet penetration is still in single digits!!

Why no one is talking about 1% in charges that AMC are allowed to take home ? Why not offer the Direct units of equity mutual fund at cheaper price like 0.5% TER ? If you want to copy US, UK. bring those type of low cost funds to India; Let AMC charge only 0.2-0.5%. Let AMC also sacrifice their profits. Why only Distributor should sacrifice ? No one respect distributor because they dont have an org like AMFI to protect their interests.

All these happenings on the 16th August is actually a damp squib. Nothing is really going to change. Yes, some IFAs will quit - actually good for them, having sold succesfully the not-so-great mutual funds as investments, they will shine elsewhere earning much more. One thing misses my understanding - when will the authourities Govt/SEBI/AMCs ever realise thay MF schemes are a sold product and not a bought product, atlease in India. Why will a rural investor invest in MFs which cannot manage an MIP decently when he has an option to invest in the Govt guaranteed Post Office schemes. Income tax afterall is not his centre of investment decision.

I HUMBLY REQUEST THE REGULATORS ,WHY THIS THOUGHT OF DIRECT ENTRY HAPPENS NOW AND NOT 20 YEARS BACK. SEBI IS TREATING IFS's LIKE BACTERIA. 1990-2004 LAG PHASE, 2005-2008 EXPONENTIAL PHASE, 2009-2011 STATIONERY PHASE 2012 DEATH PHASE. THIS ORDER WILL NOT ONLY EFFECT IFA'S BUT HAS POTENTIAL TO KILL THE INDUSTRY

one more point - the regulator has to act in the interest of all concerned . the interests of the distributor also has to be kept in mind. The regulator can also raise the bar in terms of qualification if that would help. The regulator also has to rein in irresponsible reporting by some sections of the media which gives a wrong impression to the public

Mr Dhruv, appreciate the efforts u and FIFA r taking. can i add few more points 1) This direct investment route is going to bring back passback in a big way . this will potentially be more damaging than what we all think. 2) I despite coming from a city which does not find mention in the top 15 cities register my protest against the discriminatory pricing.i feel some distributors may change the address in the KYC and log in applications in the cities (which dont come in the top 15) and get around this law we can have simple solution to the issue of the problems faced by MFs 1) uniform increase in the costing and no discrimination based on location 2) freedom of pricing to be given to the fundhouse.If SEBI is genuinely concerned about investors let them promote index funds which i feel is a good choice considering hardly 30% of the equity funds have outperformed the underlying benchmark

One single common application form for EQUITY FUND & one single common application form for DEBT FUND for all FUND HOUSES. now coming to the personal data to be filled should be just NAME & PAN No. / AADHAR CARD No. Details should be captured from KYC / AADHAR data. Once application form is accepted. Please make it mandatory to send the first SOA through Post. The client has to send the duplicate copy duly signed to confirm the details captured. This will serve dual purpose of verifying the address & authenticity of the investor. This also helps the investor if there has been any error at RTA'S end & can be rectified immediately. Unless the acknowledgment is received no further transactions should be allowed in that folio. This way AMC'S can save on paper & printing cost. We save the environment. Lesser hassles of client servicing. Shorter form to be filled.

why cannot the regulators & AMC'S plan & have a simple payout structure. Zero upfront. 1st year trail 0.25%, 2nd year trail 0.50%, 3rd year trail 0.75% & 4th year onward 1% trail. This way funds will be there for long term with AMC. Less of churning. Less of mis selling. Now coming to exit load charge 3% within 1 year, 2% for more than 1 year & less than 2 year, 1% for more than 2 years & less than 3 years, NIL for 3 years and above. Please make life of IFA'S & Investors stress free. Simplify. Please understand IFA's are also investors.

the new changes will affect the life of ifa's like me,And we wiil eliminate from the industry soon

introduction of a direct plan would have a deep impact on the IFA community as a whole.

when nothing works, regulators starts doing some mischief, so ppl feel something is being done. Actually regulators have failed on ll grounds, say it business, distributions, awareness, ...on all counts.

Your letter is very good. Let us hope they will call and take our suggestions.

SUPER

Yes as Mr Dhruv pointed out such decisions are to be taken on a consultative basis. We need an audience from sebi. Introduction of direct might lead to shrinkage of business and investors making ill informed decisions and burning their fingers. Why is the regulator contemplating the idea of increasing the fmc on NPS, what is the reason for NPS's poor response from investors. Why distributors are not keen in promoting NPS ? If sebi's objective is to increase participation and promote MF investments, introduction of direct class will jeopardise that objective. I feel we need to escalate the issue with finance ministry and put forth our views.

I believe that some vested interests are playing in the industry. The industry as of today is the effort and hard work of IFA's as a whole. In my opinion "direct" will benefit only a least percentage of investors and not the masses.

fair view

I AGRRE WITH MR MEHTA THAT THIS DECISION OF SEBI WILL SOUND A DEATH KNELL FOR THE IFAS. PREVIOUSLY WHEN THE NO ENTRY LOAD FOR DIRECT INVESTOR WAS INTRODUCED HISTORY IS THERE TO SHOW WHAT BLUNDER IT WAS, IT IS VERY CLEAR THAT WHEN AN INVESTORS WALKS DIRECTLY INTO AN AMC OFFICE NO ONE WILL HAVE THE COURAGE TO INFORM THE INVESTOR THAT U ALSO INVEST MONEY IN SUCH & SUCH SCHEMES OF OTHER AMCS ALSO FOR DIVERSIFICATION, THE VERY PURPOSE WILL BE DEFEATED, WHEN A SINGLE AMC CORNERS ALL THE INVESTORS MONEY, IT IS WE IFAS WHO PAL INVESTMENTS ACROSS VARIOUS AMCS FOR THE BENEFIT OF INVESTORS, SEBI PL REVIEW UR DECESION, 2 NAVS IS AKIN TO MRP ON MEDECINIE DISPLAYING 2 SET OF PRICES 1 FROM THE CHEMIST & 2ND FROM THE GOVT MEDECINE SHOPS OR REDCROSS SAVE IFA FRATERNITY OR ELSE DO AWAY WITH IFAS IN TOTO

Being "FAIR" to direct investors is actually "UNFAIR" to everybody and biggest loser will be investor : Distributors wont take efforts in educating investors, they wont share any important data with investors , because if investor gets adequate knowledge, chances are there that in future he may invest directly.Without distributor or adviser support it will be difficult for investors to implement long term plans , changes in allocation and investors will lose track of all the planning midway . SIP's will stop may be due to under performance of markets or schemes. Biggest worry will be , in trying to save 1% , investors might end up doing wrong investments.

What SEBI is trying to achieve through all these steps is un-understandable,as non of investors or their associations ever demanded such steps,and never complaints against IFAs have been made like mis-selling or churning,then who are the people advicing SEBI to device new and new norms?whom they trying to benifit?i am sure retail investor of india is enough educated to know about his/her financial decisions,thats the reason besides several efforts of SEBI the situations has not improved for MF investments,i agree to Mr Nilesh that SEBI will try all steps before admitting their mistake of marginalising IFAs,

By stating that FIFA is OK with "and announce that a lower cost direct share class will be available only for direct online transactions", can it be assumed that FIFA has got nothing to do with online distribution channels ? We feel the lower expense option should be available only above a threshold of say Rs. 50 lakhs. Also, distributor forays into online space which would eventially provide greater investor convenience should be promoted.

WHAT MR. DHRUV HAS EXPRESSED IS VERY LOGICAL N APPROPRIATE. ANY CHANGE MADE IN FUNDAMENTALS SHOULD GIVE TIME TO THE CONCERN COMMUNITY. THEY ALREADY KNOW THE RESULT OF ENTRY LOAD BAN ON 2009 AUG. I THINK THEY SHOULD LEARN LESSON FROM THE PAST EXPERIENCE N THEN ACT ACCORDINGLY. MY PERSONAL CONGRATULATIONS TO FIFA TEAM FOR THE WORK THEY DO FOR IFA COMMUNITY.

Such abrupt changes are definitely harmful for the retail Investors, IFA's & Mutual Fund Industry as a whole. This will surely affect the already lower penetration of MF in Tier II/III cities. I think, SEBI should have given a deep thought before going with such a hasty decision, which will make chaos in MF Industry.

IFA Galaxy welcomes the effort made by Mr. Dhuruv Metha and his team on this Direct issue. Please share your efforts so that every one the country know the efforts you put. I appreciate Mr. Vijay of Wealth-Forum for bringing this into light. FIFA can share their efforts with IFA Galaxy - We are always with you if any thing is done for the betterment of the IFA Community. Ramesh Bhat President, IFA Galaxy

Dear Sir, I completely agree with what Mr.Mehta has said, that is, "costs of an AMC servicing direct investors in the offline mode may well be higher than what they pay as commissions to distributors - which means there are really no cost savings that actually accrue in the direct mode. A lower cost offline direct model does not exist. If indeed AMCs can operate an offline direct model at a cost cheaper than the commissions they pay to distributors, they would have done so long ago. There would then be no distributors in this business". It should not become a case where large and very large investors are subsidized by small investors and small IFAs. I believe direct share class is not something that can increase mutual fund penetration and is beneficial to only a small section of investors. In fact Direct share class may harm the small investors as it may squeeze the margins of IFAs and force them out of business, cutting off an important source of service for small investors.

Words of Prof. Mathew Mendes of Mapusa, Goa are ringing even louder now . . . He had observed: It seems rational decisions will be taken, but only after exploring ALL other options. (& we may be there, almost there.)