Most IFAs clearly recognize the immense benefits of uniting under a single national IFA association and showcasing strength in numbers when engaging with regulators on matters that impact the distribution and advisory businesses. Yet, as Ramesh Bhat puts it, there are still 20+ associations spread across the country, and efforts to come together under a united platform haven't yielded the kind of results that would make a material difference. In FIFA, the IFA fraternity already has a credible and highly visible national body. Read on as Ramesh Bhat explains why despite this, there exists a strong case to create an All India Federation of Financial Advisors, which, with its inclusive, grass-root level, democratic structure, could help unite the several state level associations that exist today into a cohesive national federation.

WF: You have mooted the idea of creating an All India Federation of Financial Advisors, in a recent discussion thread in our Discussion Forum (Click Here). What is the thinking behind this initiative ?

Ramesh Bhat: The main objective is to bring all Independent financial advisors across the country on a single platform, with a low cost budget. While all IFAs clearly want to come together and present a united face to the regulators, there are two things that are coming in the way : (1) it has to be done in a cost effective manner - IFA earnings have come down drastically, and they cannot afford a very expensive membership, and (2) they need a governance structure that is truly democratic and representative - where they will have the confidence that even the smallest IFA from the remotest part of the country will have his point of view heard. If we are able to create an entity that addresses these two concerns, I am sure we will be able to unite all IFAs under a single Federation.

WF: How has been the response so far, in the initial few days since you mooted this idea?

Ramesh Bhat: Almost 300 plus people have responded and lot of responses we are getting over phone right now. These are 300new people - who we haven't been in touch with previously. Thanks to Wealth Forum, we are able to reach many more IFAs from different parts of the country, who are all enthusiastic about this initiative.

WF: One issue that keeps coming up in these discussions is the rationale of setting up this Federation when you already have FIFA, which is a highly visible association that has membership from various parts of the country. FIFA is clearly positioning itself as a national level IFA body, so what is the rationale for another national level body for IFAs?

Ramesh Bhat: Let me first start off by acknowledging the laudable work that FIFA is doing. FIFA has some very committed and successful IFAs who are doing a lot of good work in building a dialogue with various stakeholders.

The issue is not whether FIFA is doing a good job or not - they are doing a great job. The issue is whether our IFAs - typically the "aam aadmi" among our IFA fraternity - feels confident that he has a national level association where his voice - however small or big - will be heard and will get equal weightage to that of another IFA - who may have much more AuM than him. Today, the fact is that we still have more than 20 associations across the country, each doing its own bit in its state or region - and we still don't have a national level organization that brings all these regional and state level entities together under one umbrella. Today, the fact is that if the regulator wants to engage with the IFA fraternity, they will have to call all 20 plus associations if they want a truly representative feedback - or else they call just one, which may or may not be truly representative of the entire nation's IFAs.

It is in this context that I believe that even if we have 2 national level associations - but which cater to the needs and aspirations of the entire IFA fraternity across the country, its much better than having 20 - just because we couldn't form 1 national level entity. Let each IFA in the country decide which organization best suits his needs and aspirations - but let him be a part of one of them rather than none at all. I think this move is a necessary step if we have to present a more united voice when making our representations to the regulators.

One thing that I want to assure everybody is that on matters of common interest, our Federation will be very happy to work alongside FIFA and make joint representations where necessary so that the regulator and MoF understand that on certain key points, we all stand united, though we may have our own different ways of functioning within our respective organizational setups.

WF: Will the proposed Federation admit individual members or only state level associations as its members?

Ramesh Bhat: There are a lot of views on this. A new Board will first have to be constituted with representation from all five zones - North, South, East, West and Central. This Board will have to take several decisions - including this one. Some people have expressed a view that if for whatever reason they do not want to be a member of the state level association in their own state, they should still be permitted to join the national level entity as an individual member. There is an argument which says that you cannot force somebody to become a member of a state level association only if he or she has to participate in the national effort. If indeed such a point of view finds favour with the Board, the Board may then decide to heavily subsidise individuals who are members of a state level association while levying a higher charge on somebody who is not. This can address the overall cost issue - particularly for those who are already paying a membership fee at their state associations. All of these issues will need to be discussed, deliberated and finally decided on by the all India Board.

WF: Is it still early days or do you have an outline of the governance structure for the new entity?

Ramesh Bhat: The basic framework is that we want all five zones to be represented. The other principle is that each IFA gets an exactly equal vote and say as the other - there is no distinction between big or small or any distinction by amount of fees you pay to become a member. Just like we have a Parliamentary democracy where the country elects 572 MPs based on population of each district, we must have equal representation based on number of IFAs being represented.

Everybody's voice will be heard whether he is in Sikkim or whether she is in Kanyakumari or in Himachal Pradesh. Each and every IFA is important for the new Federation. Everybody's view will be taken to the regulator for the benefit of the community.

WF: What are next steps and the likely timelines in taking this whole initiative forward?

Ramesh Bhat: In fact I would like to get it done at the earliest so that further damage to the industry does not take place. Each of our associations write to SEBI on number of issues - but we don't get called by them for consultations. This can be corrected only when we are able to present a united, national face.

My sincere request to all IFA associations across the country who are reading this is to please send me the contact details of your office bearers to bhat@ifagalaxy.com. I will get in touch with you and take your inputs and guidance on how to quickly take this forward, without losing any further time.