MUTUAL FUND IFA IS NO LESS THAN A COVID WARRIOR

 

In this pandemic time, we have heard that health workers and frontline journalist are real heroes of India.  We missed one segment of the society while one is struggling to get an oxygen cylinder, ICU bed or Medicine to save their loved ones.  In fact, they have been called in this crisis time to get support for services to their financial requirements. The truth is that many things under the bright Sun is not visible often but that does not mean they don’t exist. Whom we called and asked for support is the IFAs who are none other than part of the family of a client who is fighting in this pandemic and left alone by an APP. An app cannot help as compared to an IFA. These IFAs are not selling products today but they are standing strongly behind the families who are covid infected and fighting to survive.

IFA segment played and will play a pivotal role in the Indian financial system as long as its service industry dependent on human. Online transaction platforms and other things cannot replace an IFA even during this pandemic time.  An IFA plays the role of an advisor or Guru for managing the finance in these pandemic time.

We all know how the IFA segment has suffered in the past couple of years before the pandemic strike. Well, nothing is hidden from the ones who live in the same house. It has been heard on the street of the financial industry that Mutual Fund advisors are not much value creator.  Robo advisory, online model, app-based platforms cannot replace the IFA from the human touch and support driven segment.   Being a service industry the service itself cannot be ruled out by eradicating IFAs.

Further, this segment has been struggling a lot due to falling expense ratio and mostly due to direct channels and new-age the platform operated through APP. Well in this pandemic we don’t find any other to come forward and support the clients who have lost their dear ones. This pandemic and particularly the 2^nd wave lead to a significant helpless condition for those families who have no clue for their own investments.  Human involvement in investments cannot be ruled out.

 Pandemic has erased much of the AUM for the IFA’s since we all know when jobs and salaries are cut investments are the sources of income at that point in time. But in the end, IFA is still highly required and valued in society.

In these pandemic sudden death, phenomena have created immense demand for the human-based approach and involvement. Most of the Indians don’t have “WILL” and in many of the cases, they don’t have even a nominee name mentioned in their investment. A whopping Rs35,914 crore of unclaimed funds is lying with just three financial regulators under various regulations that ensured centralisation of such money.  Do you know why this money is lying since in many of the cases, KYC is not updated, Nominee details are missing and investments details are not properly kept with those families hence no one claimed them.  When you don’t IFA to guide you this what happens in real life.

Now in the case of investments in MF, Insurance, PPF, Bank and Post Office fixed instruments, we find that in the case of old investments (10 years or 20 years old) documents need new SOA or documents. . Then at the time of redemption, many legal formalities need to be submitted for the deceased client. Further in many instances, it has been found that when the redemption process has been done the funds don’t get credited to the client family since the Bank An account is not updated in those investments products. Further we Indians are very strong in terms of unorganised about our investments documents management. IFA role is significant when the same person is no more and the family just leaves in dark. 

The story does not end here. In many cases, people on the street who are not professionals like IFA are often focused on duping these families.  IFA plays a pivotal role when a crisis strikes a family. The human touch followed by support plays a vital role behind the family who struggles to accumulate all the details of the deceased. India lacks significantly knowledge regarding investment-related compliance protocols which one needs to adopt and abide by.  

This technology did not damage the IFA segment but the perception of the same has led to a massive blow to this professional and profession.   The service support provided and required from an IFA at this point time of pandemic has been remarkable. We all know how IFAs are supporting the families when someone is hospitalised and struggling to get an Oxygen cylinder or an ICU bed or Medicine to save the dear one.  Many IFAs are helping the client family to redeem and get them liquidated to pay bills.  Health insurance claim management to life insurance claim management has become a vital requirement where IFAs are played silent, but with a  fire fighting support system.

We all know and many of us have seen that a significant number of IFAs have left the industry and many have sold their AUM to some other IFAs due to the ongoing impact mentioned above. The small size IFAs have suffered significantly as they struggled and became helpless in front of these app-based and online fancy portal.

The point is that IFAs are another group of silent heroes who are hardly being noticed. As we said earlier these IFAs cannot be replaced by Robo Advisory or an app. It's time for a change of perception for the people and industry.