38% want Amfi to regulate them, 27% prefer Sebi
AN OVERWHELMING majority, 95 per cent, of independent financial advisers (IFAs) want regulations to be framed for them so that their business environment gets better, according to a recent survey.
About 61 per cent of those surveyed felt regulations would help raise the standards of financial advisory business. The body or agency of choice for IFAs was Amfi (38 per cent) followed by Sebi (27 per cent) and a self-regulatory body of distributors (21 per cent). A body for distributors will strengthen by setting up clear rules and regulations.
But IFAs also feel that the mutual fund (MF) industry is not supportive enough.
About 70 per cent of the surveyed IFAs feel that the stance of the MF industry on entry load ban has not been supportive of the IFAs.
With entry loads banned, IFAs are slowly going into the fee-based model. About 42 per cent say they have started charging fee from their clients. Only 12 per cent said they had stopped selling MFs altogether. More than one-third said they had made no change in their approach, the survey showed.
The survey was conducted upon 373 IFAs across the country last week by Cafemutual, which tracks the MF industry. But the incentive-led structure followed in the MF industry means IFAs
are still inclined to sell products, which give them the higher cut. According to the survey, 57 per cent of IFAs said that the commission structure was very influential in pushing products.
Equity funds that performed well were seen as having highest acceptance among clients, said 65 per cent of surveyed IFAs. Only 4 per cent feel debt funds have highest acceptance.
Fund houses need to do more to ensure debt funds get their rightful share in clients’ portfolios at the retail level. This will not only help increase their AUM in debt funds, but also reduce the dependence on the more volatile category of funds.
