Investors think that the IFA control the Asset Management companies. The Amc think that the IFA controls the investor.

Far from the truth. A few investors listen to the IFA, and almost none of the Amc listen to the IFA. Unless of course he has say Rs. 800 crores industry AUM. That means a handful of IFA. You can count them on your fingers if you do not take the National Distributors into account.

So when a client receives a redemption cheque…and he forgets to deposit it for 6 months, and then wants the current NAV he thinks the IFA can get it for him. He cannot. Forget that I had one 83 year old lady whose cheque went back to the Amc. Amc in its wisdom woke up after 8 months and asked the lady. She said yes..she was travelling and forgot the redemption request. They sent her a fresh cheque…WITH THE OLD REDEMPTION AMOUNT…with no interest, no apology, no nothing. The most arrogant fund house. In this post I am not going to name any fund house. Just a crib list, but no names.

The lady asked me…I said the law is you should get INTEREST ON THAT AMOUNT. In reality she did not get interest or the current nav.

Could she have got justice? Yes. She should have complained to the Amc, IN WRITING. She should have then complained to the trustees. Then to SEBI.

Amount of redemption? Rs. 85000. Interest at 15% -Rs. 12750. This for 6 months so 6375. Will all investors take so much of trouble to get this amount? No. Its too small.

Similarly, if the investor invests, and there are bugs in the online system and the investment is delayed, or the SIP does not happen, the investor thinks that the agent can swing it for them. Far from reality. The Amc – the bigger they are, the more arrogant they are – takes its own sweet time. In case you are wondering whether the Amc is not interested in their business, you got it right. There is just too much money coming from too many channels – Ria, Ifa, banks, Nd,…so the amc may not care about the fresh Rs. 50000 sip that you are starting today!

The IFA thinks he should do asset allocation and fund selection for the investor. Wrong. The investor should give all the options to the client and let him decide. When the IFA understands the various options, he should tell the investor why large cap, how much duration, debt funds, tax implications, etc…the investor will choose the funds. Asset allocation and fund selection are the PREROGATIVES of the end user. You pick a range of funds, THE CLIENT makes the investment choice, not the IFA.

MANY IFA are not capable of doing the asset allocation – simply because they do not remove their own shoes BEFORE wearing the client’s shoes!

So IFA should learn asset allocation. Then they should offer all of that in a platter to the investor who makes the choice.