When direct mutual fund plans were introduced, many 'advisers' said, they would not recommend direct plans because they will not receive feeds from the AMC (a fancy term for account statement) and hence cannot monitor portfolios. The truth was that they were looking for an excuse to justify the trail commissions they receive.
Soon the SEBI Investment adviser regulations were introduced which mandated that distributors cannot provide investment advice (other than incidental advice). If such people want to earn from advisory, they will have to register and give up distribution/execution services.
Update: AMFI now provides direct plan feeds to SEBI registered advisers. This has resulted in a slew of direct fund investment portals
Many, make that most, in the financial services have ignored these regulations. Again the excuse of inability to manage portfolios in the absence of AMC feeds is paraded.
Some resort to use organizations like iFast which provide feeds from direct mutual funds plans for a cut in the profit. However, the feeds are only from a few AMCs. Since there is a third party involved, this goes against my definition of fee-only advisory which involves only the planner and the client.
Fee-only planners who do not want third party involvement has queried about how folios can be managed in the absence of feeds.
There are many ways to easily accomplish this.
As per my uninformed understanding, portfolio management involves the following steps:
- Taking stock of all transactions in the past and those done in the period prior to review.
- Calculating XIRR of individual instruments, for each asset and for the folio.
- Analysing the instrument in the folio and suggesting future course of action.
Steps 1 and 2 depend on transaction details (aka feed). Step 3 requires analysis.
The financial planner wants a simple way to upload past transactions (before client engagement and between reviews) and keep track of them.
MProfit Advisor offers a simple way to do this. There must be other software which do this too. I tried out Mproft yesterday and it works like a charm.
I did the following:
- Download trial version.
- Go to CAMS and get detailed portfolio for all folios including empty ones.
Search for "Consolidated Account Statement - CAMS + Karvy + FTAMIL + SBFS".
- Upload the CAMS PDF file into Mprofit and tag each instrument. That is it! Takes only a few minutes for all my transactions since 2008.
- Most importantly, Mprofit has direct plan filters for easy tagging.
The planner can have 100s of folios (different pricing) tag them according to family, financial goal and much more.
No amc feed is necessary.
To accomplish this, the planner must instruct the client to get the Cams statement from time to time.
The statement will go to the clients email which can be forwarded to the planner. The statement will have a password which has to be shared to the planner. This password is only for the statement.
Some amc statements may not be available at Cams. Account statements for such amcs can be uploaded similarly at Mprofit adviser.
In this day and age this hardly takes any effort from both parties.
Getting the statement will take about 30 seconds of effort for the client. Processing it will take about 10 mins or less for the planner.
I fail to see how this cannot be pulled off.
If the planner is too busy to spend the 10 mins, he/she must have many client and therefore should be rich enough to hire some help!
A client who is smart enough to understand the benefits of direct plans will be smart enough to spend 30 seconds to get the statement.
If your financial adviser is not suggesting direct mutual fund plans for you, get rid of them.
For step 3 analysis (some advisers will make it sound like voodoo!). You can consult online portals, excel sheets from a certain site .. ahem, or buy yourself fund analysis software.
Where there is a will there is a way. Where there is a trail, there is .....
Choose only a fee-only financial planner who will suggest direct funds and offer financial advice for a flat fee and not as a percentage of your portfolio.
The list of fee-only planners on the right panel gives you a starting point. Do not engage them if you are not comfortable with them or their terms.
Better still, DIY.