While it may be argued that direct plans were introduced prematurely, I definitely dont see it as a threat. Recently, we signed up a client who was an investor in direct plans to invest through us in regular plans. If we are able to communicate our value proposition well, I dont see why a client wont pay us (or invest through regular plans) just like he pays for any other professional service. Totally agree with your point that MF assets will increase manifold in the years to come and it is for us to claim our rightful share in the same. Cheers :)

In my opinion, in order to make the AMC profitable, the regulators are now trying hard to demotivate the IFA community & making direct more attractive. This MF business is shrinking day by day esp for IFAs....unable to see anything left for 5 years down the line for IFAs. 1)How can anybody think of winning from AMCs, if there is any conflict of business esp on pricing terms?? 2) How can anybody so sure about its advisory in equity market, if fund managers cannot?? out of growth of 12-14%, if AMC are offering 1-2% extra...so any awared person would always luv to go for the same only. All the big institution/ intelligents has already exited from the business....only few are left like us. If industry is serious, let them come with any welcome step... then we ca decide on.

The cost of advice given by amc employees to the direct investors must be charged to direct plan. I dont know weather they are doing it now. I second the comment which says a test must be passed by those who want to invest directly.It is good for the investors also.

I see red when some of the scheme fact sheets make look the difference too wide to believe(between direct and advisor mode). How come there could be more than 1% difference at scheme level, when your average trail itself is roughly 0.5% on old assets?. All the more interesting aspect is, some other AMCs show a very realistic 0.50 to 0.75% difference. How is it possible that there could be such a vast difference between major AMCs when expense ratio itself is regulated??? Also it would counterproductive for the IFAs to have such wide gap between direct and advised NAVs, as we may have to forego clients if this gap widens beyond a limit. So we should also not clamour for more lest it gives to more grist to the mills of the Pink papers.

Mr.Nilesh Kamerkars comments are absolutely correct.

JUST SEE THIS---AN IFA VISITS 3 OR 4 TIMES TO CLIENT,TELLS ABOUT PERFORMANCE OF DIFFERENT SCHEMES,FILLS FORM,GETS DEPOSITED. AFTER FEW DAYS CLIENT GETS INFORMATION OF DIRECT. HE SIMPLY GIVES AN APP. & HIS INVESTMENT MOVES TO DIRECT IS IT O.K. NO, NO, NO,ABSOLUTELY NOT. THEN WHAT SHOULD BE THE RULE--IF INVESTOR WANTS TO CONVERT IT INTO DIRECT.HE MUST REDEEM THIS,APPLY FRESH ON DIRECT MODE. IN OTHER WORDS "FOLIO STARTED BY A BROKER CAN NOT BE CONVERTED INTO DIRECT" EVERY IFA MUST RAISE THIS POINT. BY THE WAY, WHERE ARE DIFFERENT ASSOCIATIONS? WHAT ARE THEY DOING. WHY THIS POINT RAISED BY ME NOT CLICKING TO THEM.

Unlike in the past (of guaranteed-return products), Finance/Investing has become too complex to understand by amateur/average investors now. Also, when people are not educating themselves on laws of the land, when people are not educating themselves on health/medicine, when people are not educating themselves on daily electronics/appliances, why do our industry/regulators expect them to educate themselves on Finance/Investing. Is Finance/Investing so easy to understand/use by common/average/busy people? Investor Education is just a fad and Informed Investors are a rarity. Anyway, lets pity the HNI/Retail Investors in Direct Plans.

In Singapore, Investors must pass a Test, if they want to bypass a Distributor and invest directly in MF. Hope AMFI/SEBI knows this!

Thanks for the excellent article BD ji. As always very much motivating and expressing the current scenario of the IFA community. These articles make us more tough and keep us moving with more enthusiasm.

Well articulated thoughts. The message is clear: IFAs to Keep on doing what he/she can for its clients/customers on a regular basis. Remained focused on MF distribution business for a longer period and commit to it.

Its a side business henceforth in financial product selling and planning. Investors are suffering and retail participation will be clipped, since all responsible faculties such as SEBI, AMFI, AMCs and Distributor associations are having hard stance, not accommodating, not understanding investor education aspects and necessities, bent on short term egoistic thought process. Ultimately MF and AMCs, small ones will suffer, will not grow to become parrelel financial faculty to banks.

It takes lot of sweat and toil to acquire first time investors for MFs. (And what is the compensation for acquiring clients - ZILCH). However once acquired, these clients can be easily lost, by simple stroke of a pen. Losing clients to fellow competitors is normal, but here clients will be unfairly lost not to fellow distributors but manufacturers themselves, AMCs/MFs - With no scope whatsoever of winning them back. And all efforts put into acquiring clients would go down the drain. . . However, like in the past, IFAs will be encouraged by many to keep struggling in quicksand.

Analysis is correct, but the business is loosing it s shine, This was earlier a part time job, evaluated to full time and again sliding back to part time job. Complete dependency on this business income is impossible for a normal IFA. This is the concern, if income is shrinking down the interest and time spent naturally shrinks down. Really a serious concern.

Each IFA to herself, you have to walk this journey alone, stop cribbing/ thinking what amcs are doing, what regulator is doing, focus on building fanatical loyalty to your clients- 10 to 15 PC will still leave, and hopefully the balance will stay for the long term. There is no point in expecting a road map from the regulator if amcs will launch a wave of tech fund NFOs, mid cap and infrastructure NFOs and we like fools will go and sell them , banks have their own agendas, thank God they are the way they are, else we wouldnt have had a business :-). If we dont read aggressively, upgrade ourselves -learn from businesses like NJ, Client Associates, Kamathji, Brain Point , Naik Wealth and so many others we will be out of a job sooner or later.

I have observed That AMCs have not done anything worth to protect the interest of IFAs in the last decade or so albeit they keep IFAs in high pedestal and seek co-operation in every samosa - bonda meetings. One thing they can try in case of direct is to fix a threshold level for direct investment which will protect many IFAs. When some AMCs went up in arms at the time of introduction of cap on upfront commission or front ending trail why they cannot raise this issue.

I think we need to see what is the penetration of mutual fund as a product 4-5% or even less. So the world is wide open I think we need to concentrate on that rather than cribbing about Direct. I agree with when Brijesh says that it may be too early for a market which has no financial literacy. Investor education or advisor education is the need of the hour. The current format of the same is not worth the penny. The industry need to come together to spread the importance of savings through mutual funds. If each amc does its own activity the importance will not achieve its end result. AMFI being the trade body should step in with concrete plans to spread the message of investor education and hand holding.

Depending only on expectation of Acche Din may be dangerous. IFAs should be prepared to take up any other or many businesses to create alternate sources of income for them. Alongwith the direct plan the more dangerous thing is to disallow the IFAs to sell other financial products or they have to register themselves as IA and work only on fees. This is a dangerous trap. It is like any other indian regulation. If you follow it you can not do business and if you do not follow it you can do anything.

My only issue is - why cant the authority and AMFI finalizes revenue issue at once so as any one can take a call about his business model. Every quarter a new regulation is bad for distributing community,may be good for some AMCs whose profits are swelling.

On the longer run Direct plan has/will have impact on the manpower and will waste lot of the time of AMC. Rules and procedure are already making the life of even knowledgable IFA difficult & cumbersome. In many AMC, I have experienced that Direct Plan investors take lot of time of AMC staff as they are not conversant with filling up of forms and other procedures. In fact many a times IFAs has to spent more than 45 minutes to 1 hour just to submit the forms in many AMC offices because of direct plan investors.

Which are the countries where they do not have any direct plan ? Can Indians migrate to those countries and start work as a mutual fund agent / IFA ?