The Hindu Business Line : Independent financial advisors feted by fund houses

The one set of intermediaries that the asset management industry is drinking a toast to these days are the IFAs - independent financial advisors who have emerged stronger than ever before.

With IFAs playing a bigger role in connecting investors with fund houses, asset management companies are sprucing up what have come to be known in their circles as `IFA verticals'. The idea is to empower the independent operatives further, all with a view to reaching out to more clients.

Executives heading marketing functions in fund houses confirm that IFAs, a section of whom are certified financial planners (CFPs) already, are now a big force to reckon with, thanks to the kind of commitment they have lately demonstrated. This has found reflection in the quality of business that IFAs have started to bring in.

Mr Vikaas M Sachdeva, Country Head - Business Development, ING Vysya MF, maintains IFAs will be able to make their presence felt even more in the days ahead. "Many of them, including younger professionals, are very competent. The funds industry will need them to access more clients, especially on the retail side," he noted. While the number of individuals with AMFI registrations - AMFI stands for Association of Mutual Funds in India - is not immediately known, it is clear that more people are securing this in their individual capacity, maintained Mr A.P. Kurian, Chairman, adding that such entities are welcome to offer critical services as distributors, provided they meet all criteria set for them.

Individuals currently can apply for grant of certificates of registration by agreeing to follow what have been billed as `Guidelines and Norms for Intermediaries' (AGNI).

Allotment of ARN (or AMFI registration number) is for the limited purpose of registering an intermediary.

It does not imply that AMFI will take responsibility for any of the individual's act as intermediary, it is pointed out.

As things stand, fund houses of all hues intend to develop their IFA channels further. Feels Mr Jaideep Bhattacharya, CMO, UTI Mutual Fund, independent operators are often very focused in their approach, frequently managing to strike personal ties with clients.

"In a situation where money is extremely flighty, this is a factor that funds look forward to," he argues, adding that UTI Mutual, which has recently reworked its organisational structure, expects IFAs to step up their activity in the coming days. The intermediation that takes place is overwhelmingly in favour of banks and large national-level distribution companies.

The first set includes large players such as Standard Chartered and Citi. The second includes distributors - such as Karvy and Bajaj Capital - that have reached out to smaller centres.

Securities broking houses too play a role here, offering mutual funds to clients as part of their wealth management activities. The arrival of IFAs has actually led to a widening of the market, notes Mr Vineet Potnis, CMO, DBS Cholamandalam MF.

"There is (still) a demand-supply gap... not all parts of the addressable section of the population are being serviced by large distributors", he said, suggesting that fund houses will have to encourage both channels to function well.

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