Investment a specialised subject : In India Investment is considered as a specialised subject for which there are different Institute like AMFI and various courses like CFP. If a person wants to become Mutual fund Agent then he has to clear the AMFI Exam then only he can do the business of Mutual fund distribution. The same is the case with many other courses in India for eg. if you want to do the audit you have to clear CA Exam. If you want to certify the civil construction work you must become a Architect. If Govt. take a stand that audit is not necessary than many private businesses will not get their accounts audited and discipline will not be maintained. The businessman will not get proper advice relating to accounting work.The same is applicable in many professional work. No one will provide any free services to anybody and we can not assume a person to be master in all fields.

The calm from fund houses is really surprising and disturbing. They don't seem to bother about the issue much as Mr.K.Parameswaran,ARN-2540, points out. In fact, I couldn't resist my feeling that some vested interests and a few fund houses are instrumental in bringing in the direct share class keeping their own business strategies in mind, side stepping the greater good of the industry. I may be wrong, but it feels like there is a systematic cleansing of IFA community right from the entry load ban to direct share class and it seems like some vested interests are trying to clear the decks for corporates by cleansing out IFAs and in the process the regulator is being mis-guided. It is difficult to connect the dots. But with every decision, thousands of IFAs are being thrown out of the industry and so are lakhs of small investors who are dependent on these IFAs. Hope I am wrong in my thinking process, if I am right, God save the industry.

I have a serious question how many cases will be lodged against AMC as there is a client relationship .Any guy who losses in MF will file a case in a consumer court.Atleast somebody will make money from DIRECT,the lawyers.

I personally feel that SEBI should cut the expense ratio to 1.5% flat ( no slabs ) from the current level for all investors and the AMC's should cut down all expenses on distributors and pay a fixed trail from day one till the assets last and all applications that come direct to the AMC's the brokerage part has to get into the Investor Education fund and the Exit loads should get into the fund. This might not be a good option for a new advisor but atleast the existing distributor will not feel the pintch and in the days to come we can concentrate on new investors

It can be understanding with meeting SEBI is that MF is guineapig for Sebi to do all the experiment and then analyse results until it dies.AMC,s will remain spectator to see experiment. All the IFA,s should decide a date for SHANTIPATH. LET MF,S REST IN PIECE.

IF AMCs or SEBI wants to reduce cost then let AMC employees take cut in salary .

IFA communkity knocking the door of SEBI for redressal is meaningless and time wasting because SEBI is a constitutional body created to protect the investor class and not the distribution community. Having said that, the time has come for the IFA community to look beyond their present areas of operation. In locations where AMCs have no set up, the cost factor will make direct investment irrelevant. It is such areas that the IFA community should now look for survival. Secondly, for IFAs who work professionally, such changes will hardly matter. IFAs have themselves to be bloamed for the present istuation because they have all along been trying short cut methods. There are many exceptions of course.

Continued: 4) The direct TER should be arrived at after considering the cost of sourcing and servicing the direct customer and should be kept at the minimum. 5) AMCs should not resort to unethical business practice of soliciting business, poaching IFA clients, there should a clear redresal forum.

Surprising really, SEBI is giving a "Silent Hearing" and AMCs who cry that they can't survive without a distributor network is a "Silent Spectator" - real irony. Now that SEBI has let the cat of the bag, we need to think about damage control measures: 1) Direct should be offered for investments above a particular threshold limit only say Rs 10 Lacs (per scheme), as it is assumed that investors with sizable assets will spend enough time and would have the acumen to decide things on their own, than a small investor with limited resources. 2) Those who wish to go direct can do so, after their investment plan is vetted, certified by a qualified adviser, this would ensure at least they pay a fee for the service we do. 3) Under no circumstance the existing AUM be transferred to direct, this is being fair to the IFA (for once let SEBI think about being fair to investor) for the hard work the IFA had put in sourcing, educating and servicing the client this long.

Finally a client told me that now I will make investment direct in MF, 18 month ago he do'nt know anything about Mutual Fund. I convert them in Mutual Fund & now he convert direct. What is my future?

Most of the clients dose not know that their is certain percente recurring expence charged on their investment every year.After having direct investment the picture will be clear.

Dear Rajaram and Bharta soneja,i am sure AMC's will waste no time to convert HNI clients to direct class by approaching them directly,already AMC staff is involved in giving data of HNI clients to some of their favoured distributors,who have good relations with staff -so no reason to disbelief this fear.

sebi believes in doing first and regreting latter, they came with direct and then hell broke loose and now they are trying get investors in mutual funds by taking wrong actions. while taking hasty decisions why is that all the three sides i.e manufacturer, distributor and end user not consulted and decisions are being forced and not thought about their ramifications. if sebi wanted the amcs not to make that direct saving as profits than let that money go into fund and there lot of more things to do for getting investors and not go just about saving costs but please streamline the process, as there are lot of small but time consuming problems

Sir, Customer interest is our priority. We have to advise them to invest direct. We will not receive anything for our efforts. It is not practical to collect fee for small SIPs. This means our efforts are not worth. So we will not advise anybody. So mutual fund business and penetration will come down. Is it that SEBI wants?

Sir, I believe that customer's interest are our priority. I will advise customers to invest direct. AMC

In India corruption is in the first track and running like the Rajdhani Express but no rules and regulations are made to stop and punish and guily.Nothing is done..But on the other hand thereis the mutual fund industry regulated by our respected SEBI where very often new new rules and regulations are made only to make the struggling and honest IFA struggle every day.How will a IFA survive,how will a IFA support his family.Did SEBI ever thought about it.We are the most corrupt citizen I think.

Bharat soneja, I think your fear is true. If an AMC is ready to offer direct shares, they may send a letter asking clients if they are ready for Direct conversion, if client sign that letter and send it back, their folio can be converted to direct folio. There is no need for NOC from current agent.

I think now a days Regulators take short sighted decisions. I dont understand by Classifying two injvestor class how the Industry is going to expand?. A investor who invests directly is certainly not a wellinformed Investor. Any wrong investment will put himm off from Mutual funds for ever. When he goes through a distributor he has some one to explain him and make him understand what is MF. Come what may i dont think MF industry will expand unless Investment becomes need in onur country. Todays investment is looked at as parking money and not one way of earning. So I suppose Investor education is must till such time all these actions will be short sighted.

As our total client's data is available at different AMCS, are not we at threat that an individual will visit to our client from AMC and shift total AUM as direct. Have SEBI thought in this angle and what are the solutions

Not all people are talented enough to be Civil Servants; consequently not all people have the constitutional protection for jobs and regular income as Civil Servants do. I guess, an IFA’ s shoes would be too dirty and too small to be in them, for the Civil Servants. Being an IFA is a mere acceptance of the fact for most us that we can’t find a better paying and a more respectful job any where else. Most of us spent the best part of our lives doing this business and planning our lives around this business. If you throw us out of here now, we don’t know where to go sir. What we beg for is a bit of compassion. Doing business as an IFA in itself is fraught with uncertainty and if we are not sure about when our years’ of hard work is going to be transferred to direct share class too, we lose hope sir. Please don’t take everything away in guise of giving something Sir. Please let us live with hope.

If Investors can invest directly with clearing AMFI Test ,then why wants agents to sit for AMFI Exam and refresher course after spending Rs 3500 on refresher and 2500 for renewal of license , let investor clear AMFI and let them invest directly

I think we should be more worried about which partner is over excited to launch DIRECT plan. Time will tell who respects partners.

If direct investor has a different NAV then why did SEBI abolished entry load(thru IFA) when a similar cost effective mode of investment was available (zero load)for investers going direct, my Humble appeal to the policy makers that pls. don`t be the GURU GREG CHAPPEL of mutual fund industry.Enough of experiments,atleast don`t let the industry shrink if u don`t know how to grow it.

Once Jimmy Amarnath had commented that the Indian Selectors were ' a bunch of jokers'. I am afraid Sebi is in the same position. They only listen what the distributors have to say and implement autocratically what they feel is right. They do not seem to get the logic of the issue.

Direct investment(whether offline or online) by investors should be allowed only if they are NCFM qualified or if they provide written recommendation from a qualified personnel(CFP, MF distributor/Advisor). It is a myth(SEBI's assumption) that direct investment fueled by low cost shall create market penetration. Markets for all product categories across world are created either by education or by mass distribution, and not by pricing alone. An IFA is the least cost educator and distributor. A simple comparison study should be done to identify HR cost per person in an AMC vis a vis an IFA and office rental per sq ft of an AMC with that of an IFA. MF being a service industry, these are the two most critical costs in our business. IF the ratios favor AMCs, they would certainly be in a position to pass benefit to the investor. If not, then SEBI should relook its agenda today so that they don't have to introduce another gimmick to justify this decision

How many of these low cost crusaders are willing to take a cut in their own incomes / revenues as a 'token' for investor friendly measure? Will all those involved with the mutual funds industry take home less pay because it helps in reducing the investor's cost? Cost efficiency must be achieved by achieving economies of scale & not by crippling the industry in this manner. Once a robust industry is now suffering and all under the guise of 'investor protection'. And they now want to see how much damage these new guidelines can make before they can change their minds. (see point no.2) This is like a one big circus . . .

continuing.. Because distributors are cheaper than AMC inhouse distribution network. SEBI is doing day dreaming about passing costs to investors. I am sorry to say this. SEBI hasn't understood the business economics of distribution.

TER = AMC fees+AMC costs+Distribution commission(DC). AMC are not going to reduce AMC fees and AMC costs what they are incurring today. If AMC is going to service customers directly, their costs will be higher than DC that are paid now. Otherwise they will lose money. I don't see a reason for any wise AMC to offer direct shares and lose money. Distributors need not worry, this model can't work economically. Another proof, if this can be done, it would have been done long time back by AMC. Why they need distributors ?

The recent decision of SEBI introducing direct investor as a new class is clearly depriving IFA communty a level playing field because in a same product there will be an arbitrage of expences and all pre sales, advisory etc will go in vain as the investor will go to direct to save cost after taking the benifit from advisory community thru various means which is well known to every body. Further we are also depriped to sell low cost product which SEBI should consider in some innovative way which is a practise in developed countries. Again by no means bussiness generated by IFA community should be switched to direct mode and let investor redeem and aplay for direct mode ,however switching IFA can always be possible as per the present practise otherwise an asset build over a period will be switched to direct mode in a second which is unjustified and undemocratic too. Let AMC bring new products totaly for direct share class and investor do their homework and take their own call.

The whole concept of Direct sales, undermines or rather ignores the effort put in by the IFA's all these years, or is it that SEBI thinks that its investor awareness programs have been such a success that the industry does not need distributors. Its like allowinf buying OTC medicines from the counter without the doctors prescription. While the medicines may be common day to day ones like a paracetamol for fever, one should remember that it can also be fatal. The SEBI is trying to offer a knofe a kid to play, keeping in mind its consequences. It doesnt seem funny.................

Hrad work done by IFA will get hithard by concept of direct sell and SEBI'S plan to increase client base in rural area will be a dream without any incentive to IFA .In past Sebi's descion to abolish Entry load ALREADY harm the industry which they realised late and try to compensate indirectly with transaction charges, increase in trail etc , but now again they are on old path .

Sir , would like to ask on much of the hullabaloo ahead …. Do the industry really sell equity funds on the basis of lower expense ratio ? , Isn’t it that with same expense ratio or even lower the performance gap in general comes out to be 5 to 6 % quite so often …? And if we really observe the period when at first Direct term was introduced by SEBI how much it affected the industry where as I remember our advisors being quite apprehensive that now all HNI will start investing direct. … I think we need to look at share of direct investor so far and the class of investor…. We are still an in efficient market where leader is determined and awarded by capacity and capability of generating alpha… Yes it will impact the game of liquid fund and liquid + fund category with obvious impact on advisor’s indulged not even debt fund. We need not forget that this is the industry where “Winner’s Don’t Take It All”.

If all online investor transactions become direct, then it will detrimental to the hard work done so far from the IFA side. Instead if a common online platform was given to distributors also and and the freedom for the investors to choose between it could mellow down the detrimental effect. Already the direct class is there. If an investor comes direct, and ensures that by writing direct, direct class can prevail Ivestors have to educated on this. Only the Lower TER is new now. Even if Trail fee has to be demolished, how a distribution can survive?

In a way, SEBI's decision, though detrimental to the immediate cause of the IFAs, will weed out certain mal practices in the industry today. One such evil is stamping system which may RMs in collusion with unscrupulous IFAs indulge in. In this process, there is a tie up between the local AMC and certain IFAs whereby all such applications which are directly received at the AMC office are stamped with the ARN code of the distributor and the upfront commission is pocketed by the RM. The IFA concerned who builds up a huge AUM in the process, is happy with the trail which hs receives. I ;know of many IFAs who do nothing, but still earn huge trail commissions through this method. This will be totally erradicated if SEBI's new regulation is implemented in letter and spirit.

I may be wrong, but what I understand from the news is that SEBI merely said that AMCs may(or may not) start direct plans. My question to knowledgeable people: was there any bar on AMCs to start direct plans before ? If not, then why they have not started direct plans so far ? If some investors are wise enough to invest in direct plans, shouldn't they invest directly in equity ?

we request that sebi should consider all the views of associations from now onwards atleat. Sebi should understand the ground realities of procuring business from smaller towns. Otherwise mf penentration will not happens in the small cities n villages.

we all should reject the additional expense ratio given by regulator and keep working in old fashion. In getting more remuneration we are running risk of annihilation. All this talk of lower expense for direct came only after media coverage of load coming back. We should all just ask for level playing field for distributors.

I agree with Bharat Bhushan that cost of business is not just about getting the transaction done but it should be bifurcated in pre-sales and post sales. In pre sales the few of the cost incurred are about prospecting, meeting, educating, follow ups and at last comes transation. Then comes post sales services like redemption, statements, Non-Financial Transactions, etc. If any AMC just thinks of saving cost of trail commission by lowering cost of existing AUM, it would be its short sightedness and nothing else. Hope some sense prevail to all industry players.

Patient Hearing - Has been patented by SEBI.The actions of SEBI are not democratic but Autocratic.Earlier instance such hearing have not got the desired result. Why not SEBI give a Patient Hearing to all Associations at one place same time ? This Associations meeting with SEBI need to carry the signature of it's members on the views to be put forward. In a democracy it is our right to put forward our views and actions based on this have to be taken. Hearings fall on one ear and out of the other.

While determining cost of direct investments, total costs incurred in bringing in only new PAN Holders into the system should be considered. Cost Saving merely by churning assets across schemes/ options/ fund houses/ channels and depriving distributors commissions is cheating. It can rightly be suspected that certain AMCs would handpick most profitable segments for direct business and short-change the distributors.