variable load structure

As per recent SEBI ORDER, the financial regulator for Mutual Funds industry, the retail investors are freed from the ENTRY LOAD of 2.25 % on all the mutual fund investments hitherto charged to pay commission/trail fees to the certified independent financial advisors(IFAs), registered under AMFI certified programme and has introduced the variable load structure wherein, the Fund Houses will be able to invest the entire amount without deducting entry load of 2.25% on the amount so invested by the investors, thus leaving the intermediaries to fend for themselves on the question of services charges/commission collectable from the investors.

This will be a great relief to the investors who were routing their investments through the intermediaries all these years and paying 2.25% as upfront entry level charges each time they made investments.

The relief to investors ends here...but the greater problem of choosing the right fund/scheme from various fund houses starts NOW...for the ill-informed, who form the majority of retail investors in India...

It is to be fully conceeded that a big chunk of IFAs who used to mis-sell the products by using the switch/redemption processes available under the scheme to investors, to frequently churn the portfolios/schemes -without providing a comprehensive plan of action to the retail investors to stay invested in a fund/scheme for a reasonably long time - thus maximising their upfront commission income.

The new scenario thus provides FINANCIAL PLANNERS and Qualified Independent Advisors an opportunity to retain customers and build better business volumes from the serious and well informed investors who do not mind PAYING for the SERVICES to a good financial advisor with expertise and knowledge a reasonable fee/charges as agreed upon between them and who offers better after- sale services like reviewing the portfolios periodically, updates on market movements and such other small services which a retail investor requires from the intermediaries/advisors regularly.

Though a large number of intermediaries will be loosing their jobs in the short run, the new regulation creates a right environment for both the investors and the intermediaries to upgrade their skill,expertise and awareness on the mutual fund investments and take the industry to a new high in the comming years.

As it has been said by the Investment Guru Warren Buffet ..."Price is what you Pay and Value is what you Get"