I have said this many times in the past….the easiest person who can be blamed is the distributor..so blame him!
A couple of months ago Moneylife carried an article by Mr. Balakrishnan as to why investors should use the services of a bank, and not that of an individual distributor. I found it amusing, but did not find the energy to rebutt the article line by line, so did not bother doing it.
Now once more Moneylife has said that there is an outflow of equity funds in the month of April, and the distibutor is to be blamed. Fantastic.
Recently one mutual fund had a ‘scheme’ where for creating an equity corpus. Well for a paltry sum of sales the ‘greedy’ distributors were being taken to the land of ‘sin’. Did the distributors sell? Yes of course they did. Will the fund perform? Tch, tch who ever writes about performance of funds (it is damn difficult and I know of 4-5 journos who will even attempt reading an article on performance analysis!!). Has any part of the media written about the trip? No, of course not, some of them are busy preparing for the trip.
One mutual fund recently saw a big distributor pull out money from their fund – and the distributor continues to pull out BECAUSE he is not being paid ‘extra’ commission. Who promised him the ‘extra’ commission….the sales head…WHO will be blamed? the distributor! LOL.
Frankly I think the distributors role is being exaggerated. For all the services my distributor gives me, he cannot get me to invest outside of the 3 fund houses in which I invest. I just do not need it. He of course comes with a new pitch quite regularly, but I just do not listen. I also realise that if he comes to my office and picks up a SIP form of Rs. 500 a month of the security guard, HE IS DOING the security guard a favor – and is partly subsidised by a colleague who does a Rs. 30,000 per month SIP.
To expect that the distributor will sit with you and do your financial planning (another super abused word), is stupid. I wish clients knew what they want, wish they could articulate their needs. Fund schemes which did well in the past but are now slipping will see an outflow. However the biggest distributors now are the banks that have floated the fund houses – so a SBI BANK sells SBI fund schemes, Hdfc bank sells Hdfc mutual fund, Axis bank….so on and so forth.
No investor I know has ever reacted to fund performance sensibly in our country. And financial services industry was never, ever run for the customer.
If banks were run for the customer, if mutual funds had to perform to get further money, if RBI was even worried about customer service life would have been different.
We would have had 5 banks, savings bank account interest rates would have been open to competition, 5 mutual fund houses, and perhaps 200 million investors. If we have 45 mutual funds, 45 more applicants waiting in the wings, …falling distributors, falling Assets Under Management, simple thing is ‘blame the distributor’. Why is withdrawing from SBI tax magnum? afterall it was a well performing fund was it not? Why is he not selling Mastershare? It is such a nice old fund, is it not?
Tch, tch the distributor is greedy. The asset management companies, the trustees, the custodian, the directors, the brokers, the research analysts, the personal finance magazines, the personal finance websites, channels, banks, are all in the business of public service.
The distributor is in this business for making money. How gross! Ayn Rand help!!
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