Distributors have been facing rough weather ever since the Securities and Exchange Board of India abolished entry load on mutual funds. Spiralling manpower costs and dwindling commissions have made it difficult for advisors to physically service individual investors.
The advisor may at best earn Rs 50 as upfront fees - if he is smart enough to charge a fee, that is - by servicing an investor wishing to invest Rs 10,000 in an equity fund. If the investor were to invest in a liquid fund, short-term fund or a fixed maturity plan (FMP), the advisor will earn even less.
Now, consider the work involved in completing the transaction. Typically, an advisor meets a client at his home or office, explains and convinces him to invest in a fund, fills up the form, and submits it to the registrar. All this involves time, commuting and communication costs. Practically speaking, Rs 50 may not be sufficient to compensate an agent for all his/her efforts. Hence, many independent financial advisors (IFAs) have stopped distributing mutual funds, making it difficult for investors to execute transactions physically.
Consequently, many investors are contemplating shifting to online investing. "With upfront commissions having gone, today there is a challenge to manage costs.
ONLINE ADVANTAGES
There are several advantages of going online. Firstly, paperwork is done away with. In the physical world, for every new investment you make, you have to fill up a form, wait for a person to collect it, write a cheque, and submit proof that you comply with know-your-client (KYC) norms. In the online mode, you can transact without any paperwork, irrespective of your physical location.
There is no need to worry about account statements. In the physical format, account statements pile up over a period of time, which often leaves you clueless about the value of your investments. However, if you invest online, the value of your investments is available anytime you log in. You also need not look for statements. Transactions like systematic investment plan (SIP) can be altered as per your convenience or done at the click of a button.
If you have internet banking, integrating your banking account with your mutual fund account ensures seamless transactions with instant confirmation. With 42 asset management companies (AMCs) and hundreds of schemes to choose from, it is an arduous task for individual investors to choose a scheme that best suits their needs.
There are many online services like us offering you research and tools to track your investments, helping you with your decisions. They have in-house research teams, who research mutual fund schemes on a regular basis by tracking their performance and even meeting fund managers to get their views on the markets. In addition to this, they have financial calculators, which give you solutions as to how much you should invest to meet your goals. These websites offer asset allocation models that can be used to construct your portfolio based on your age and risk appetite. Be-sides, they also have model portfolios, which you can replicate while building your own.
Customers can regularly review and update portfolios online, helping them to take corrective actions if needed. However, many investors still hesitate to invest online and are comfortable having face-to-face interactions with an advisor. "The biggest benefit of investing in mutual fund online is the ability to invest in multiple funds of different AMCs from one platform and even track their performances by having a single portfolio," says Sreekanth Meenakshi, founder and director, fundsindia.com There are other benefits, too, such as the ease of tracking (no need to ask for statements from fund houses, just log in to get the current value) and valueadded services like starting anSIP, which such platforms can potentially provide.
WAYS TO GO ONLINE :
There are various ways in which you can invest in mutual funds online. There are independent websites such as ours, which offer these services. Besides, there are brokerages which, in addition to stock broking, also offer online services for investment in mutual funds.
You have to register with these websites by doing the necessary paperwork. Once your account is opened, you can transact in mutual funds online. What's more, in case you want to skip an SIP payment in a particular month due to some emergency, you can do so at the click of a mouse, which would not be possible in the physical world.
Another way out is to invest online from the mutual fund's website itself. However, for the first investment you will have to fill up a physical application form. Secondly, you will have to register with each mutual fund separately. So this may not be feasible for all. Another way out is buying through the stock exchange broker, the way you buy and sell shares, using your demat account. You can buy and sell mutual funds online the same way as you trade in shares, through either the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE), provided your broker is offering these services.
By doing this, you can have a consolidated statement for your stocks as well as mutual funds. To start with, you first need to register with your existing stock broker by filling up the required twopage form as mandated by the regulator. Once this is done you can buy and sell your units through your stock broker the same way you buy and sell shares. The units will get credited in your demat account.
In addition to this, the NSDL has enabled holding of mutual fund units in the dematerialised form for demat account holders. You can use your existing demat accounts for converting your existing mutual fund units into the dematerialised form. You can also redeem your mutual fund units the way you sell stocks by placing an order through the stock exchange platform.
Subsequently, you can submit the delivery instruction slip to your DP to transfer the mutual fund units, the same way you submit it for stocks. However, dealing with the stock exchange comes at a cost. Firstly, your broker could charge you a fee for buying mutual funds, and, secondly, you will have to pay an annual fee for maintaining your depository account.
Here at SAMPARK, we offer a unique process of onliline investment as well as we visits clients at their door on request for physical mode at our home town. We provide each and every client a unique ID and PASSWORD for online login. On successful login they will get their full portfolio under one single page, irrespective of the AMC.
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Source : ET
The advisor may at best earn Rs 50 as upfront fees - if he is smart enough to charge a fee, that is - by servicing an investor wishing to invest Rs 10,000 in an equity fund. If the investor were to invest in a liquid fund, short-term fund or a fixed maturity plan (FMP), the advisor will earn even less.
Now, consider the work involved in completing the transaction. Typically, an advisor meets a client at his home or office, explains and convinces him to invest in a fund, fills up the form, and submits it to the registrar. All this involves time, commuting and communication costs. Practically speaking, Rs 50 may not be sufficient to compensate an agent for all his/her efforts. Hence, many independent financial advisors (IFAs) have stopped distributing mutual funds, making it difficult for investors to execute transactions physically.
Consequently, many investors are contemplating shifting to online investing. "With upfront commissions having gone, today there is a challenge to manage costs.
ONLINE ADVANTAGES
There are several advantages of going online. Firstly, paperwork is done away with. In the physical world, for every new investment you make, you have to fill up a form, wait for a person to collect it, write a cheque, and submit proof that you comply with know-your-client (KYC) norms. In the online mode, you can transact without any paperwork, irrespective of your physical location.
There is no need to worry about account statements. In the physical format, account statements pile up over a period of time, which often leaves you clueless about the value of your investments. However, if you invest online, the value of your investments is available anytime you log in. You also need not look for statements. Transactions like systematic investment plan (SIP) can be altered as per your convenience or done at the click of a button.
If you have internet banking, integrating your banking account with your mutual fund account ensures seamless transactions with instant confirmation. With 42 asset management companies (AMCs) and hundreds of schemes to choose from, it is an arduous task for individual investors to choose a scheme that best suits their needs.
There are many online services like us offering you research and tools to track your investments, helping you with your decisions. They have in-house research teams, who research mutual fund schemes on a regular basis by tracking their performance and even meeting fund managers to get their views on the markets. In addition to this, they have financial calculators, which give you solutions as to how much you should invest to meet your goals. These websites offer asset allocation models that can be used to construct your portfolio based on your age and risk appetite. Be-sides, they also have model portfolios, which you can replicate while building your own.
Customers can regularly review and update portfolios online, helping them to take corrective actions if needed. However, many investors still hesitate to invest online and are comfortable having face-to-face interactions with an advisor. "The biggest benefit of investing in mutual fund online is the ability to invest in multiple funds of different AMCs from one platform and even track their performances by having a single portfolio," says Sreekanth Meenakshi, founder and director, fundsindia.com There are other benefits, too, such as the ease of tracking (no need to ask for statements from fund houses, just log in to get the current value) and valueadded services like starting anSIP, which such platforms can potentially provide.
WAYS TO GO ONLINE :
There are various ways in which you can invest in mutual funds online. There are independent websites such as ours, which offer these services. Besides, there are brokerages which, in addition to stock broking, also offer online services for investment in mutual funds.
You have to register with these websites by doing the necessary paperwork. Once your account is opened, you can transact in mutual funds online. What's more, in case you want to skip an SIP payment in a particular month due to some emergency, you can do so at the click of a mouse, which would not be possible in the physical world.
Another way out is to invest online from the mutual fund's website itself. However, for the first investment you will have to fill up a physical application form. Secondly, you will have to register with each mutual fund separately. So this may not be feasible for all. Another way out is buying through the stock exchange broker, the way you buy and sell shares, using your demat account. You can buy and sell mutual funds online the same way as you trade in shares, through either the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE), provided your broker is offering these services.
By doing this, you can have a consolidated statement for your stocks as well as mutual funds. To start with, you first need to register with your existing stock broker by filling up the required twopage form as mandated by the regulator. Once this is done you can buy and sell your units through your stock broker the same way you buy and sell shares. The units will get credited in your demat account.
In addition to this, the NSDL has enabled holding of mutual fund units in the dematerialised form for demat account holders. You can use your existing demat accounts for converting your existing mutual fund units into the dematerialised form. You can also redeem your mutual fund units the way you sell stocks by placing an order through the stock exchange platform.
Subsequently, you can submit the delivery instruction slip to your DP to transfer the mutual fund units, the same way you submit it for stocks. However, dealing with the stock exchange comes at a cost. Firstly, your broker could charge you a fee for buying mutual funds, and, secondly, you will have to pay an annual fee for maintaining your depository account.
Here at SAMPARK, we offer a unique process of onliline investment as well as we visits clients at their door on request for physical mode at our home town. We provide each and every client a unique ID and PASSWORD for online login. On successful login they will get their full portfolio under one single page, irrespective of the AMC.
~
Source : ET
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