Dear Team, Im an IFA from coimbatore. Ive 12yrs of selling Life insurance as a manager. Ive taken Mf business in the last 2yrs. In my experience, the knowledge level of consumer is very low and clients require proper guidance for their investments. So we need to advice them. Secondly, When you are convincing them and making them to invest, its very difficult to charge a Fee to them. Im ok with, ifas completing CFP. We need knowledge improvement continuously. But removing commission or reducing trial or direct will only spoil distribution business.

With whatever powers, mechanism available with the regulators, associations, AMCs etc. why nobody is talking about catching some errant distributors and punishing them within the framework of existing law or at least stopping them from doing wrong things a.k.a. misselling? Why only new rules are being proposed which will enentually force the IFA to go out of the business. Why the powers gear up themselves to find out the missellers and either stop it or punish it. There will not be an end to this unless this is done.

Investor Type 1: These investors have no Goals, they dont know and dont want to know what mutual fund means, they simply have some surplus cash which they want to invest and get a return thats better than bank FDs. They are not bothered which funds distributor selects for them. They have placed full faith in the distributor and are happy with his service. He does not charge them for his advice and is happy with whatever brokerage he gets from the AMCs. They go to the distributor simply because they have faith in him and insist on his advise. How will SEBI treat this case?

SEBI must concentrate on strengthening the robustness of the intermediaries viz distributors, RIA, Online, Robo, Banking Channel etc than micro managing the affairs and inclined towards promoting one set of model or plan. By doing so another 20 crores investors can be on-boarded .

Well thought out discussion being put forward. Does SEBI team have enough manpower/other sources to conduct Audit for all MF Advisors at present? My suggestion if audit is required, then start with those who earn Rs.10 lakh and more in a year (base year: 2016-17) from MF to their clients.

I will totally concentrate on point 3 & 4 suggested by you. That way my basic premise of safeguarding clients and distributors conflict of interest is automatically addressed.

Distributors should be allowed to market mutual fund schemes under Regular Plans and no fee from clients while RIAs should be on fee basis and should go through Direct plans.

The core issue is the lack of faith that the industry has on distributors. When MF industry was being set up years ago, no one was bothered about edu qualifications that would have ensured minimum suitability levels of a distributor being sufficiently high. For example, doctors need MBBS and related education to actually qualify to diagnose and advise. In MF industry, low entry barrier (just one stupid exam) has meant most of our distributor community is not exactly qualified and their only argument is, look at where we have taken the industry over the yrs. SEBI/ GOI needs to bring out an extensive PG/ higher level educational course that will qualify distributors and advisors both. Post that, it should be the distributors’ or advisors choice- whether to charge the AMC (through commissions) or the customer (through financial fee). Till this grassroot/ structural change happens in our educational system, this distributor vs RIA talk is just our community sounding money minded, cheap.

1) Why should a distributor not give advice, do goal setting, recommend funds, what is the logic that only RIA is best suited to do so. Why presume that distributor is going to suggest unsuitable schemes. 2) Why should an investor who has comfort level with distributor over several years suddenly have faith in some other unknown RIA 3) If audit is indeed been carried out on largest distributors mostly Banks who are notorious for mis-selling what are the findings and what steps SEBI has taken on these wrong doers. 4) A long jump from 2 cr investors to 20 cr investors cannot be achieved with tied hands and legs. What is required is to boost the confidence and encourage many others to join the industry. Lets focus on individual IFAs which can provide self employment to lakhs of individual without burdening the govt.

Good thoughts "Regulatory requirement is to maintain ethical practice and participation" this is possible when & only when SEBI bans Regular Plans for RIAs because when they are getting advisory fees from the clients. It will be ethical when Investor will not suffer double charges 1 Advisory Fees 2 Expanse Ratio As per SEBIs thought they are protecting investors interest. If really so Regular Plans should be ban for RIA. RIA will sell/Suggest Direct Plans only and Distributors will sell Regular Plans only. This will be level playing for both and also called ETHICAL in all manner otherwise looks like Partial (one sided) decision.

In an open market place, let there be multiple intermediaries to serve the end customer be it IFA or RIA or Robos etc... Like wise brick & mortar players vis-a-vis online stores .... let the customer choose based on their need ... Regulatory requirement is to maintain ethical practice and participation / expansion of new and new investors base ....