To encourage distributors and empower them to offer advisory and be able to charge fee from investors, the country’s largest mutual fund player Reliance Mutual Fund has taken an initiative to help distributors become financial advisers through a certified financial planner (CFP) certification.
Reliance Mutual Fund has negotiated with the Financial Planning Standards Board (FPSB) to charge a significantly lower fee from distributors for the CFP certification programme.
The CFP programme along with its five levels of examination will cost a minimum Rs 23, 000.
The fund house will also refund the fee to distributors who clear the examination.
As of now, most distributors are product providers. “The biggest challenge now is how distributors charge fees and for that we want to turn them into financial advisers,” said said Sundeep Sikka, chief executive officer, Reliance Mutual Fund.
“We have negotiated a discounted fee for distributors, to encourage them to join the CFP programme and start working like advisers,” said Sikka.
“We have offered this to all our 40,000 distributors and 6,000 of them have already shown interest.” The fund house has rolled out this initiative in 20 cities and will take it to over 50 cities in the next year.
Ever since the mutual fund industry entered the regulatory regime of no-entry load, distributors have been crying foul.
While banks offering mutual fund products do charge an advisery fee from investors, distributors find themselves constrained. The industry has also seen distributors move towards selling Unit-Linked Insurance Policy.
“Since investor need will drive mutual funds, its merits like being cheap and tax efficient, will be strong pull factors,” said Sikka.