IIPM, ADMISSIONS FOR NEW DELHI & GURGAON BRANCHES
Whatever be the case, the decision is definitely not in favor of the distributors’ fraternity. It may also slowdown the penetration of the fund industry as a whole as distributors/ brokers contribute to a majority of inflows in mutual funds. Without proper incentive to spread their business, the distribution channels may become lax, thereby slackening growth of the sector.
Needless to say, the move will benefit a small population of savvy investors, who have the awareness and wherewithal to invest directly online. But the average investor always goes to a good financial advisor for investment related advice. Agrees Katoch, “Investor’s needs are individualistic as every investor has a different risk-return profile. A distributor’s function is to provide solutions regarding the right asset-mix and product-mix for each investor. As far as a distributor is doing a good job, investor will tend to come to them.” In effect, while this move may be investor friendly, it’s impact may not be as far reaching as desired by SEBI, mainly because in a country where the vast majority are still unaware about the nitty gritties of the financial market and investment options, eliminating the intermediary will certainly be a tough nut to crack
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Source : IIPM Editorial, 2008
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