The SEBI has decided to take matters more\nseriously in the interest of investors. It has pulled out 23 irregularities of\nMutual Funds. <\/p>\n\n\n\n
SEBI sent a letter notifying the Association\nof Mutual Funds in India (AMFI) about the irregular practices of\nmutual funds that the inspection team observed for a period, from April 01,\n2016 to March 31, 2017. <\/p>\n\n\n\n
Some of the major observations from the\nletter are:<\/p>\n\n\n\n
These observations made by the market\nregulator highlight so many instances, wherein the investors’ interest has been\ncompromised. <\/p>\n\n\n\n
Amidst all the upheaval going on in the\neconomy; subdued growth, lower consumer sentiment, the volatility of the equity\nmarkets, corporate ratings downgrading, global political movements, crude price\nchanges, trade war tensions, etc., this letter is another big blow for the\ninvestors, who are trying to adapt to the dips that their investment portfolio has\nwitnessed. <\/p>\n\n\n\n
Considering the diversification and rupee-cost averaging as the key benefits of investing in mutual funds<\/a>, many investors invested heavily in mutual funds. <\/p>\n\n\n\n But this letter highlights the multiple\nways, in terms of the transaction cost, incorrect reporting, collaborations\nwith suspended distributors, breach of a regulatory framework, misuse of\ninvestor education funds, etc., investors have been betrayed because of the\nirregularities of mutual fund houses being unethical and non-transparent in\ntheir dealings. <\/p>\n\n\n\n [Read<\/strong>: Are Mutual Funds Crossing Their Limits?<\/a>]<\/p>\n\n\n\n Plus, in one of the recent news reporting,\nby The Economic Times, \u2018Union minister\nAnurag Thakur said that SEBI noticed various irregularities with respect\nto functioning of mutual funds like failure to identify and appropriate all the\nexpenses in individual schemes as per regulatory requirements<\/em>.\u2019 Despite the many stringent measures taken\nin the past for the financial wellbeing of investors, which the mutual fund\nhouses continue to cope with, the audit report and letter of warning based on\nthe observations do not paint a good picture of Mutual Fund industry. <\/p>\n\n\n\n Disgruntled investors losing trust is the\nbiggest failure for investment and every player in the mutual fund industry. <\/p>\n\n\n\n If\nmutual fund industry has to see growth, each and every one is equally\nresponsible. Mutual fund houses need to put in practice the best fiduciary\nstandards as custodian of peoples\u2019 hard-earned money, be more responsible asset\nmanagers (and not become asset gatherers) to uphold their investors\u2019 interest\nas the topmost priority. <\/p>\n\n\n\n Fund\nhouses should not mis-sell products; but instead educate investors, adequately\nuse funds allocated to the schemes responsibly through ethical intermediaries\/advisers\nwho are certified from a recognised governing body and follow ethical practices.\nThe fund managers should not invest investors hard-earned money in an ad hoc\nmanner in order to generate higher returns.<\/p>\n\n\n\n Even the advisers play a key role, hence\nthey should follow ethics to earn trust, placing the investor\u2019s\/client\u2019s\ninterest first and always follow high fiduciary standards. For the Indian\nmutual fund industry to scale new heights, the collective effort of\ndistributors and investment advisers are necessary. Mutual fund distributors\nand investment advisers also need to well receive regulatory changes. <\/p>\n\n\n\n In addition, advisers should recommend products after due diligence to the investors based on their needs, risk profile, investment objectives, financial goals, and their time horizon. Also, educate investors on the importance of asset allocation, which is a strategy<\/a> in itself. This judicious approach can help IFAs gain the confidence of investors. <\/p>\n\n\n\n [Read<\/strong>: How IFAs Can Prepare Clients For Uncertainties<\/a>]<\/p>\n\n\n\n So, be the \u201cCertified Financial Guardian<\/a>\u201d, who the investors can trust to handhold them and empathetically address the clients\u2019 financial concerns ethically. <\/p>\n\n\n\n Certified Financial Guardians can help\nadvisers grow their business, but for investors\/clients to stick around for the\nlong term, it is important for IFAs to build a relationship founded on ethics\nand prudent business practices. <\/p>\n\n\n\n [Read<\/strong>: How IFAs Can Gain the Trust and Respect of Their Clients<\/a>]<\/p>\n\n\n\n Remember, building trust and gaining the\nrespect of investors\/clients is a process; IFAs need to earn their goodwill. It\nwill not happen by chance, but with renewed diligence. As a dedicated adviser,\nIFAs should consistently be there for them throughout their financial journey\nand make a conscious effort.<\/p>\n\n\n\n Besides, it is equally important that even\nthe investors do their own research to choose the unethical, unbiased,\nexperienced, and research-backed adviser from a reputed company. <\/p>\n\n\n\n PersonalFN<\/a> has a proven track record in investment planning, has offered investment recommendations to more than 8,000 clients, and has created customised financial plans for more than 2,000 clients to date. This has been possible because PersonalFN provides unbiased and ethical recommendations, guiding along the way investors to assess their risk profile before any investment, and advises them on direct schemes by thorough research<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" The SEBI has decided to take matters more seriously in the interest of investors. It has pulled out 23 irregularities of Mutual Funds. SEBI sent a letter notifying the Association of Mutual Funds in India (AMFI) about the irregular practices of mutual funds that the inspection team observed for a period, from April 01, 2016 to…<\/p>\n","protected":false},"author":4,"featured_media":851,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/850"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=850"}],"version-history":[{"count":2,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/850\/revisions"}],"predecessor-version":[{"id":853,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/850\/revisions\/853"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/851"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n
\nAnurag Thakur even added, “During\n2018-19, 47 warning letters and 24 deficiency letters were issued to mutual\nfunds\/ Asset Management Companies and two warning letters were issued to\ntrustees of mutual funds while adjudication proceedings were initiated against\nfive AMCs, four trustee companies and one CEO of AMC.” <\/em><\/p>\n\n\n\n