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MF News 6% distributors earn more than Rs.20 lakh annually

6% distributors earn more than Rs.20 lakh annually

Of the 46,285 active distributors, 2,865 distributors earn gross commission of over Rs.20 lakh in a year.
Nishant Patnaik Oct 11, 2017

Of the 46,285 distributors who get brokerage every year (can be considered as active), 2,865 or 6% of them earn gross commission of more than Rs.20 lakh annually, shows AMFI data.

AMFI has released this data during AMFI General Board Meeting held in August through a presentation.

The data shows that 2,842 distributors earn between Rs.10 and Rs.20 lakh annually.

However, a majority of distributors i.e. 16,000 or 35% distributors earn between Rs.1 lakh and Rs.10 lakh a year.

The rest of 24,572 distributors earn less than Rs.1 lakh annually.

That means, 94% or 43,421 distributors earn less than Rs.20 lakh annually and are eligible to get relief under the government’s latest move to defer the implementation of reverse charge mechanism (RCM).

Talking about the distributors earning over Rs.20 lakh annually, the CEO of a large fund house points out that top distributors manage 90% of industry’s total AUM. In fact, AMFI data shows that India’s top 687 MF distributors now manage almost 40% of industry’s total AUM.

He further said that the number has increased from 1200 to 2865 in two years, which is positive for the industry. He said that this growth is due to market gains and steady inflows in equity funds. While the BSE Sensex inched up by 4,350 points, or 17%, to close at 29,600 points, equity funds witnessed 30% growth in net inflows last fiscal. Another factor that has contributed to the increase in gross commission is introduction of forward charge mechanism, he added.

Rajesh Patwardhan, Chief Marketing Officer, LIC Mutual Fund believes that the number of distributors earning more than Rs.20 lakh will go up to 9% by FY 2018-19. “Many large distributors have multiple businesses such as NCDs, corporate FDs and insurance. However, the interest rates have gone down and money has been flowing to mutual funds.”

When asked how distributors can increase their income, a senior official advised distributors to use technology to grow business. “Distributors can increase their bandwidth by saving time on paperwork and utilize this time to increase client base.”

Another senior official requesting anonymity suggested that distributors should bring long-term money to the industry through perpetual SIP. “This data reflects that many distributors have not been bringing long term money to the industry. They should focus on creating long term SIP book to earn healthy trail income.”

 

Income slab of mutual fund distributors

Earning slab per annum

No. of distributors

% to total

More than Rs.20 lakh

2865

6

Between Rs. 10 lakh and Rs.20 lakh

2842

6

Between Rs. 1 lakh and Rs.10lakh

15977

35

Between Rs.25,000 and Rs.1 lakh

9642

21

Less than Rs.25000

14960

32

Total

46285

100

 

Source: AMFI

6 Comments
Vipulkumar N. Shah · 2 months ago
6% of distributors are earning more than 20 lakhs by way of MF commission. So balance 94% distributors` service tax deducted by mfs in past has gone in Mumbai gutter. And now GST deducted by mfs for these 94% distributors will go in Mumbai gutter. So mutual cafe, wealth forum, FIFA and other should raise the voice to stop deducting gst for these 94% distributors permanently.
satya · 2 months ago
18% FOR GST AND 31% FOR INCOME TAX AND EFFECTIVELY 58% FOR THOSE WHO ARE WORKING - 42% GOES TO IMPROVE THE STANDARD OF LIVING OF "POOR" INDIANS. SARVE BAVANTU SUKINAH
PREMANSHU DAS · 2 months ago
If the commission system works like in LIC then I think distributors will work freely. If as an agent I submit a monthly ECS policy to LIC & sumit a monthly SIP and death comes in my life then my nominee can get the renewal commission from LIC BUT ONLY GET THE UPFRONT + TRAIL ON 1st installment (no income from 2nd installment )
It is the most negetive point from a distributor side but there is no loss for AMC or INVESTOR
PK Tripathi · 2 months ago
*Please solve this puzzle and get me out of this maize.*

1. In fact Some of the total invoice value is paid as brokerage to me.

2. Invoice shows , Taxable value is less than Total invoice value and IGST is calculated on Taxable value.

3. Total invoice value is sum of Taxable value and IGST.

Please clerify me....

1. What is Taxable value, how AMC arrive at it and how is it different from brokerage paid.

2. If I am a GST unregistered, weather AMC deduct GST from Taxable value or Total invoice value.

3. If I am GST registered I have to pay GST on Taxable value or Total invoice value (ie, paid as brokerage ).

Your effort will be highly appreciated.
Sawai Singh · 2 months ago
Such datas would have given deep thoughts by AMFI to categorise mutual fund industry distribution channels as in other services.As this 94% distributors are self employed,have professional knowledge ,they are real entrepreneur who are future national distributor like Bajaj Capital or NJ India. With low trail brokerage and high on services,Regulator(SEBI) must respect these sub 50k entrepreneur in mutual fund industry's growth story in our country.MF penetration still very low comparing to developed countries where it has to reach.Still GST council open for every stake holders for tax consideration,but other recognition,status and skill enhancement falls with SEBI for fair dealing with all distributor.Let me share with all of you that "What is Mutual fund ?" This term is taken to illiterate and financially illiterate commons by IFAs like me roughly 15 times more than our real Clients . SEBI surely need to research on Mutual Fund penetration pattern and history for better distribution rules and regulations.
narayanan p.s · 2 months ago
They have now delayed the brokerages of unregistered brokers .when it will released no idea.
Instead retain 20% and release the balance.diwali month and weekend ,brokers need money as well.
release the 20% when clarity of date on reverse mechanism of GST is offically confirmed.
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