31 Aug Empowering is Protecting
There is a big effort of investor education is going on. Various people trying to do their bit through different activities. However no one is in sync with each other. There is a huge budget for IEP and definitely media is going to be the biggest beneficiary of that but I strongly believe that education on investment cannot be a onetime activity. That’s the reason MFDs are also being asked to renew their certification. That suggests that my understanding of education is in line with the industry body. Then why not to have a proper course for investors which can educate them about investing. The link for this course should be allowed to put on each and every website/social media platforms the investor visits. The course should be offered for free under IEP.
Promoting low cost means investor protection? I think investor protection means helping them to avoid taking wrong decisions.
सस्ता रोये बार बार… it’s a famous saying in hindi but in case of buying Direct, only because it is cheap सस्ता रोये एक बारis reason enough to not to come back again in MF fold when the markets go down.
There is a big disruption waiting to happen in mutual fund industry and will happen soon. Unfortunate part is mutual fund is also being sold as oil and soap on these Direct platform. ‘EXPERTS’ may think that IFAs are feeling threatened due to this, few may get affected but the bigger threat is to investor community because the internet has reached to the remotest part of the country and these apps have the access to the people who can fall prey to the idea of ‘Sasta hai to badhiya hai’.
I have following suggestions to AMCs and AMFI
(1) Direct investors should be AMFI certified before investing. Though I understand that these platforms are RIAs and come under SEBI but there is a clause which gives discretion to AMCs to say NO to the money.
(2) The existing investors who are coming through FEE only advisors can be exempted.
(3) The platforms offering Direct plan as freebie strictly should be asked to get investors certified first and should be given a window of 3-6 months to get their existing clients certified.
As I see, most of these platforms are using Direct plan to acquire customers to coross sell other products where they get higher upfront and their valuation goes up because of that. Secondly, the more worrisome part is they may use ad budget of IEP to acquire clients.
If we really want to protect the investors in true sense then EMPOWERING them is the most important thing.