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Trends Average income of an IFA is Rs.13,000 per month: Karvy

Average income of an IFA is Rs.13,000 per month: Karvy

'MF income is not enough motivation for IFA to take up MF distribution as full time activity’
Daya R Mar 9, 2017

A recent Karvy study reveals that an average IFA earns Rs.13,000 per month.

According to the report, an average IFA today earns close to Rs.1.50 lakh per annum. Although it has improved from Rs.81,000 per annum in the FY 2013-14, it is quite clear that an average earning of an IFA is not enough for him to take up MF distribution as his full time activity.

The report says that there are 34,000 active distribution in the mutual fund industry.

Voicing the need to have an alternate source of income at least in the initial days, Mumbai-based IFA Nisreen Mamaji, Moneyworks Financial Advisors says that IFAs should first test the waters and see if they have the necessary skill sets to survive in this field. “I started out as an insurance agent and then gradulally started selling mutual funds. Having established myself in this field, I now sell mutual funds full time. This technique could work for those advisors who are not sure if they can handle this type of work,” she says.

Commenting on the finding of the study by Karvy, Chennai-based D Muthukrishnan, Wise Wealth Advisors stressed the need to increase wallet size to survive in this business. “When you are getting paid as a percentage of AUM, your AUM must be sizable to make the business lucrative. Increasing the expense ratio is not an option as then retail investors will not find mutual funds attractive. So the best way to grow business is to focus on increasing wallet size per client,” he says.

Talking about the merits of a fee based model over a commission based model, Kavita Menon, Mumbai-based RIA, feels that the regulatory environment in more conducive towards a fee based model. “As a fee based advisor you have a choice of fixing a price to the services you will be giving a client, unlike a distributor model where the fund house decides what percentage of commission you are eligible for,” she says.

6 Comments
P N KESHARI · 2 weeks ago
IFA job is no longer remunerative in environment of growing Direct mode. Further any one I mean Investor can switch to other Agent or in Direct Mode. We give reasonable clarity on recommending or deciding portfolio but then also future remains uncertain. Now we have to pay apart Service Tax too @15% .
jaideep · 2 weeks ago
Maybe the regulator and the critics of IFAs should be informed of the princely average incomes that the IFA gets through mutual funds. Inspite of this low level of income, there is far lesser mis-selling than in many other products or services, which is proved by the fact that mutual fund AUMs have gone up, inspite of some of them being through the direct route. It would be good if the regulator stops tinkering with rules for a few years and allows the MF industry to develop and create its own niche in the investor's mind.
Subhankar Dasgupta · 2 weeks ago
People who wants to start this business, have to understand that it is not a short time thing. one should reach a decent amount of AUM if they mainly focus on SIP. The penetration level was very poor in 90's as well as upto 2010.now people are also understand the taste of Mutualfund investment so its now easier than earlier to sale Mutual fund. Most IFA's lost their focus and started to sale different product also.
Reply
Anvi Shah · 2 weeks ago
May be a Govt sweeper( 4th class employee) earn more than this... Pretty shameful
sadbhavana · 2 weeks ago
it is ridiculous calculation. it is also misleading. most of amcs/distributors do not give what is promised. and for that matter , the calculations are also not transparent unlike LIC. people who starts feels dejected, and remorseful of the payments which a labourer of MNREGA earns. even ola/uber drivers are buying cars and earning a monthly salary of rs 30000 while evading taxes on some pretexts. the above quoted figure is not average but a handful of the people who must in this field for minimum of 5to 6years.
AMFI instead of improving the conditions has failed to understand the plights of new entrants and more miserable by joining with big wigs allowed for capping the hard labor put in by the ifa. the ifa is exposed to some many vagaries of weather, sulkings, dejections,rejections investing time, energy, telephone calls, petrol expenses is left with a peanut after not understandable calculations of the amcs/distributors. the distributors/amc/fund managers make hay while the labour of the poor ifa is pittance iis this justifiable-sadbhavana
Prashant · 2 weeks ago
Let us ask SEBI chairman to reduce his salary to Rs.13000/- a month and run his house? Also this salary can anytime go down if SEBI or AMFI decide to( without any concrete study). Also you can be defamed for what you have not done(misselling which is a work of a bank and brokers). Also at anytime SEBI and AMFI(hands in gloves) decide to remove all employees and just have people on contract basis because your salary makes the products more expensive for clients.
What will be his answer?
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