Financial planners now have a body

A group of mutual fund distributors and insurance advisors gathered at the Bombay Stock Exchange building in October last year to talk about forming an organisation to represent them. There was one difference though""there were no big institutional distributors at the meeting. The meeting has now culminated in the Financial Advisors Association of India (FAAIDA), an umbrella organisation for individual financial advisors (IFAs).

The body has been formed in collaboration with financial information management company, Iris. The latter will put together the website and provide inputs in the form of reports for the benefit of FAAIDA.

FAAIDA has has about 150 members and is in talks with IFAs in Delhi and Kolkata apart from Mumbai. "The IFAs do not have a body. We plan to expand the membership and subsequently apply to Sebi for self-regulatory organisation (SRO) status," said Hasan Wangde, member of FAAIDA.

The body already had one meeting with the former chairman of the Securities and Exchange Board of India, M Damodaran.

Sebi had made it mandatory for the mutual funds, in January 2008, not to charge any entry/exit loads from the investors. "All we can now do is to improve the quality of our services to the end clients," admitted Devang Sonawane, IFA and member, FAAIDA.

But there are many other issues within the IFA community that we can address, he added. For instance, the inability of IFAs to be empanelled with certain mutual funds needs to be tackled.

FAAIDA would train its members and distributors in an attempt to improve the services rendered to clients and investors. Big distributors such as banks have been hitherto training their relationship managers to execute product sales.

"We plan to organise programmes for the newer members and even make use of training institutes to train distributors. We may even enter into tie-ups with these bodies for some sort of certification at a later date," said P V Subramanyam, member of FAAIDA.

Currently, only institutional distributors such as big banks and broking houses are the charter members of the Financial Planning and Standards Board of India (FPSBI). The FPSBI has about 46 charter members, including Fidelity, American Express Bank and DBS Cholamandalam AMC.

"FPSBI is run by the office bearers like a company and not represented by people on the ground, unlike the international body that is managed by financial planners," said a top financial planner who did not wish to be named.

In India, the FPSBI is in charge of the Chartered Financial Planner (CFP) certification. While the CFP mark is well-recognised internationally, the number of people clearing the exams in India is low.

Moreover, FPSBI has granted around 80-85 certificates to persons who did not even clear these exams because they have been nominated by the charter members, he added.