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  • MF News How will the commissions be calculated in CAS?

    How will the commissions be calculated in CAS?

    Any payments (other than commission) made in the form of gifts/rewards, trips, event sponsorships etc. to distributors will be apportioned and displayed at investor/scheme level.
    Ravi Samalad Sep 30, 2016

    Any payments (other than commission) made in the form of gifts/rewards, trips, event sponsorships etc. to distributors will be apportioned and displayed at investor/scheme level.

    From October 1, AMCs will start publishing distributors commissions in common account statements which also include all marketing expenses incurred on them in the form of gifts/rewards, trips and event sponsorships.

    An operations head of a leading fund house said that AMFI has asked AMCs to calculate the commissions based on the average AUM held by investor in each scheme. Here’s how the commissions will be calculated:

    Let us assume that IFA Rajesh has two clients, Client A and Client B. Both have invested in scheme XYZ. Client A has invested Rs. 6,000 and client B has invested Rs. 4,000. Rajesh gets 1% commission on the amount invested by client A and client B. The AMC has also spent Rs. 100 on Rajesh as marketing expense. So this marketing expense (Rs. 100) will be apportioned to both investors (client A & client B). Based on 1% commission and after factoring the marketing expense, the CAS will show that Rajesh has received 110 from client A, which is Rs. 60 as commission and Rs. 50 as expense. Similarly, client B’s CAS will show that Rajesh has received Rs. 90 (Rs. 40 commission and Rs. 50 as marketing expense).

    Here’s how Rajesh’s commission structure would like:

     

     

    The commissions will be disclosed on absolute basis with no break up of other expenses incurred on distributors.

    The operations head of a foreign fund house said that SEBI has asked AMCs to calculate the commission + expenses incurred on each transaction which is not feasible. Hence, AMFI has come up with a formula to calculate it based on the average AUM of investors in each scheme. AMFI has said that any payments (other than commission) made in the form of gifts/rewards, trips, event sponsorships etc. to distributors needs to be apportioned and should be displayed at investor/scheme level. The commission disclosed will be on ‘paid’ basis excluding clawback. The clawback amount will be shown at each ARN level, which can be a positive or negative number.

    This CAS will be sent to both – investors who have transacted and not transacted during the half yearly period. Investors who have done their KYC through depositories will get the CAS from NSDL/CDSL and those who have done KYC through distributors will get it from Manipal Technologies, a printing press appointed by AMFI to dispatch CAS.

    Here is the CAS format prepared by AMFI. Click on the icon to download the file.  

     

     

     

     

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    6 Comments
    MANDEEP SINGH · 7 years ago `
    THIS GIVE BAD IMPECT TO INVESTOR
    Prashant shah · 7 years ago `
    I do not understand what will SEBI achieve by doing this? Why is it so important how much a distributor earn rather than how much the customer gets in hand? By reducing charges to removing distributors the SEBI is letting the manufacturer sell their product directly to the investor. Will the employee of the fund house who suggest the scheme will be RIA? Will the employee of the fund house be informed about the schemes available in the market or will that employee only sell their own schemes only? Also Direct sale is completely unsolicited. Why SEBI wants everyone to go for an unsolicited sale? Will manufacturer not push product which are beneficial for the manufacturer? The commission is for the hand holding of a customer and not because we want to cheat the customer.
    amit Kachalia · 7 years ago `
    I am happy and welcome these changes as a "FEE ONLY" Financial Planner. Nothing to say more as all the changes going my way.
    Satish kumar · 7 years ago `
    This is really an absurd act from SEBI. This should be done only in a matured market like US or UK, where more than 50? of people invest in MF. In India hardly 3% people invest in MF. I really doubt whether SEBI had done any study whether this act is right at this point of time.
    jignesh n vyas · 7 years ago `
    I am agree with satish kumar
    Hemant vyas · 7 years ago `
    If sebi thought that how much Commission is pass on to the advisor from investment madeby the customer than it should be applied to evry industry right from Insurance ( both bancaassurance and tied channel), since in bancaassurance channel bank is earning more than 50 % as a Commission, in pharma industry medical shop owners earning is also quite high, medical practitioner (doctor) fees, operation charge vary from patients to patients why ?
    Personal tuition class fees ? There is no clauses for fees, why ?
    Fast food business ( farsan like samosa etc) earns more than 300 % profits. Who controlled them ?

    If sebi is in favour of customer then every business bill have to have column of their earning ( all businesses like hotel, restaurant, fast food, retailers/ traders of industrial material ) hardware, medical shop, transporters, tours and travels, jewellers, banks, all service providers, share market brokers and many more.......


    Because these all businesses having handsome profit margin vis a vis ifa with around 1 %.

    There is so many things to think for customers apart for Commission.
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