Over 65% of AUM (assets under management) of fund houses came from just five cities in India, the Association of Mutual Funds in India (AMFI) data indicated in June. The five metro cities included Mumbai, New Delhi, Bengaluru, Kolkata and Chennai which contributed Rs. 46.5 million AUM. The data indicated that fund houses in India have failed to reach investors in smaller cities or rural areas.
Pankaaj Maalde, head-financial planning, ApnaPaisa.com, “The MF industry has failed to increase its network all over India and hence tier-II and tier-III cities are not investing in MFs. Recently, I have witnessed closing down of some branches of the top AMCs (asset management companies) in Mumbai.”
Keyur Shah, director, Vantage Institute of Financial Markets, said, “Giving higher incentive is not a solution to the problem. Later on, the same semi-urban distributor’s commission will compared with a life insurance agent. Further there may be comparison on how MFs commissions can match the commission of life insurance products. It is important to promote financial literacy among consumers. IFAs need to change their approach from product-based to goal-based and provide wider advisory services and for that IFA needs to undergo for additional professional global certifications like CFP/CWM/CPFA, etc.”
Suresh Sadagopan, founder, Ladder7 Financial Advisories, said, “The crux of the matter is investor education and awareness. There is no awareness beyond top towns and cities. Awareness needs to be created in rural and semi-rural areas. If SEBI & AMFI does that it will be a great help for distributors, who will automatically get business.”