Chennai-based group has the largest membership base in the country.
Chennai-based IFA Galaxy, an online group of distributors, is likely to become the first official representative body of the mutual fund (MF) distributors in the country. With 10,000 members (a quarter of the total active independent financial advisors (IFAs) in the country), the two-year-old organisation now plans to become an umbrella body of distributor associations across the country, wherein district-level and the state-level associations could enroll.
“We are encouraging IFAs in other cities to form their own associations and we are planning to bring such associations under the IFA Galaxy . We will become a pan-India federation, and will have all the IFA associations as members,” Ramesh Bhat, CEO, IFA Galaxy, said.
As of date, the group has 10,200 members, including some prominent names like AK Narayanan, president of Tamil Nadu Investors Association, associated with the effort.
The Association of Mutual Funds in India (Amfi) has also acknowledged its presence. “We are happy to see IFA Galaxy has over 10,000 IFAs as members. Amfi will soon begin to have discussions with them,” H N Sinor, CEO of Amfi, said.
The group is in touch with Amfi, and has sought an appointment with U K Sinha, chairman, Securities and Exchange Board of India (Sebi), to discuss their issues.
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IFA Galaxy started as a Google group in August 2009, when the ban on entry load came into force. What started as a window to vent frustration over painful regulatory changes is now on the verge of becoming a national body.
“Two years ago, we were not an organised group. IFA Galaxy provided a platform where every individual could share his knowledge and grievances both in the domain and profession”, said B Muthukrishnan of Wise Wealth Advisors, who has been a member of IFA Galaxy since early days.
There were many attempts in the past to float an industry body for the distributors. Some were dominated by the corporate distributors and the others by the professionals. None of them could receive an active participation from the grassroots level IFAs. Diverse interests and equally diverse consumer profiles made even a local association of IFAs a non-starter.
Knowledge levels, grievances and problems of IFA dealing with assets under management (AUM) of Rs 10 lakh were much different from those who managed over Rs 100 crore.
Creating a body that represents these diverse interests is the key challenge, say IFAs. Many efforts in the past have failed to attract wide participation. Financial Intermediaries Association of India (FIAI), an effort spearheaded by Delhi-based Bajaj Capital, has gone into a slumber after the initial buzz.
“There has not been much activity in FIAI for the past several months,” said Sanjiv Bajaj of Bajaj Capital, a Delhi-based corporate distributor of mutual funds. Bajaj said his company will be supportive of any industry initiative. “I have not heard of any organisation with such a strong membership. I think they are stronger in the South,” he added.
Financial Planning Standards Board of India, that had an initial vision to become an industry body, has started prioritising its educational role.
Even as IFA Galaxy inches closer to getting a formal recognition, the key challenge is to put in place the necessary structures. Having started as an online forum, the group can grow rapidly without facing the difficulties of a typical brick and mortar set-up. However, that is only half the job done, say some. “Facebook, they say, is bigger than some countries. But, still Facebook is not a country,” remarks a critic.
Also, the number of members and the verification processes are questioned by some. But Bhat of IFA galaxy says only Amfi-registered distributors are allowed to enter the group. “We were able to attract huge membership because we did not charge any fee. Other groups used to charge a few thousands as registration fee, which many IFAs did not want to pay,” he explains.
“Where there was not any kind of cohesiveness, some kind of cohesiveness is welcome. The challenge is how they formalise it, and put in place necessary structures to make it truly representative,” said Muthukrishnan of Wise Wealth.