Generations of Financial advisors have been motivating people to invest in mutual funds and getting the best returns possible. However, the advisors of today are retracting from selling mutual funds. This is quite a unique scenario of the present.
With the best mutual fund distributor software in India, along with all the advancements that we are witnessing today, it is really something to ponder on!
What is discouraging the IFAs to sell Mutual Funds?
There has been a further dip in registration this September for ARNs. That is 11% lower versus the 2nd quarter of 2019 and 36% lower in comparison to March 2019.
According to me, this is troublesome news for the ₹24-trillion MF Industry. A combination of factors could be responsible for this dip; here are a few that I am highlighting:
· SEBI’s move last year to cut equity funds ER from 2.50% to 2.25% has profited investors but has cut deep holes in the pockets of distributors.
· Selling insurance over Mutual Funds has become more viable on the rationale of lower regulatory issues and higher commissions.
· Scrapping upfront commissions have made it difficult for small distributors to absorb the costs of acquiring clients initially.
· The rise of digital platforms that make investing perceptive and effortless, has certainly had a hand in IFAs losing out on opportunities to bank first time investors.
In India, the FinTech arena has seen intriguing digital disruptions over the past few years. The rise of myriad and diverse start-ups may have a hand in aggregating numerous old investors as well as rookies, but IFAs still play a significant role and will continue to do so. Their accessibility to investors beyond the top-15 cities, where digital has not yet made its way, is an advantage that should not be discounted. Additionally, as a country, we still bank heavily on a High Touch Sales model due to which IFAs have held a significant role in guiding new investors to stay put and invested even in volatile market scenarios.
IFAs are crucial to unlocking the immense investment potential that lies not only within but even beyond the extent of metros. In the best interest of the MF industry, we have to find a way to swiftly increase the national average of 437 ARNs per million households.
Mutual funds are a general favorite, and the role of the financial advisors have always been crucial in the rise of the mutual funds. However, with the IFAs shunning their responsibilities when it comes to selling them, the present scenario is far from good. Nevertheless, the best mobile apps for mutual fund investment have emerged in these dark days to be quite promising of late.
By Rajan Pathak, Co-Founder & MD, Fintso
Rajan is known for his in-depth insight into the financial entrepreneur’s venture with 25+ years of establishing various B2B businesses, which gives him the edge and adeptness to scale the advisory business.
As the CEO of IFAN Finserv (formerly ING), Rajan managed a team of 40+ people, created a wide network serving 1300+ Independent Financial Advisors managing assets over $500 million.