Despite the ban on charging entry load, which has shut one of the major

RELATED ARTICLES Financial worries dog bond market, prices fall

revenue streams, there appears to be a high level of interest among financial advisors to work for mutual funds.

An indication of this could be gauged from the fact that Axis Mutual Fund, which started operations less than two months ago, has already empanelled over 12,000 independent financial advisors (IFAs) till date to sell their products. Another big fund, Reliance Mutual Fund (MF) is at present working with nearly 2000 IFAs.

CEO at Axis Mutual Fund Rajiv Anand told Financial Chronicle that they have been training financial advisors to reach out to investors in small cities and towns. “We have empanelled nearly 12,000 IFAs. We are also working with some large distributors such as Bajaj Capital, Kotak Bank, Karvy Consultants and our own parent bank, Axis Bank,” he said.

Anand said that the IFAs generate fee income from the mutual funds themselves while charging a fee from the investors, instead of getting a commission. “Financial advisors now negotiate the fee charged from investors against the 2.25 per cent mandatory commission they used to get from investors. In addition, they continue to get up to 1.25 per cent brokerage from asset management companies for the business they bring to us,” he said.

CEO of Reliance Mutual Fund Sundeep Sikka said, “We have achieved significant visibility in the market with the help of more than 2,000 independent financial advisors.”

The Securities and Exchange Board of India (Sebi) has asked the mutual fund distributors to charge investors as per the quality of advisory services and not for just selling mutual fund schemes. The market regulator has also asked the mutual fund industry not to pay more than the 1.25 per cent fee (including the upfront load and trail fee) to distributors to keep expenses in check. Post-entry load ban, small financial advisors were facing the uphill task competing with large distributors, who had the resources and means to provide advisory services to their clients.

Gauging the importance of IFAs and the need to help them, many fund houses have started special training programmes to provide them with necessary advisory skills. Many fund houses have even started online platforms through which IFAs can sell mutual fund schemes and offer advisory services to investors.

Business head at Principal Mutual Fund Sudipto Roy told Financial Chronicle, “We encourage our IFAs to guide their clients in planning for their future through various initiatives. We help them enhance their skills by enrolling in our knowledge and training platform – Gurukul.