The impact on mutual fund distributors will be the biggest factor that will change the investor landscape in coming months.
Fintso, a vertical aggregator for independent financial advisors, end-consumers and mutual fund manufacturers, has detailed the impact of novel coronavirus, or COVID-19, on the investor ecosystem.
The report largely emphasises the effects with regards to various players of the ecosystem: consumers, regulators, distributors and manufacturers.
According to the report, distributors will have to discover a solution to sustain themselves, especially smaller players, from a cash flow and sustainability perspective.
The methods could be adapting the conventional mode of communication, switching their product sales pitches and risk management for their clients.
The report stated that implementation of regulations have led to structural changes and due to its longer impact it will result in business changes. “There are changes that are done for immediate needs: e.g. moratorium on loans (will affect a lot of lenders, including P2P), and some like the SEBI regulations that basically banned the usage of papers for MF transactions,” the report said.
Independent financial entrepreneurs (financial advisors) will have to adapt to new digital measures and embrace new channels of communication, including WhatsApp /Telegram and email, but mostly importantly, their own digital app, the report said.
“Financial advisors will also have to reinvent who advisors cater to – rather than focussing on new client acquisition, they will consolidate their base and increase the share-of-wallet from their existing clients by showcasing a wider bouquet of products and services,” the report said.
COVID-19 has disrupted the investor ecosystem and the unpredictability about the period of time the industry will require to get back to normal makes the situation although more vulnerable.
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