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  • Ask Us ‘In investor initiated AUM transfers, the new MFD gets trail income from seventh month’

    ‘In investor initiated AUM transfers, the new MFD gets trail income from seventh month’

    Ask us: The new ARN transfer norm will be not be effective retrospectively.
    Nishant Patnaik Mar 10, 2024

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    One of readers wrote to us with query:

    Recently, I read an article on Cafemutual about AMCs paying trail commission to the new distributor if investors initiate transfer of assets. In this context, I have two questions:

    • Whether the new ARN transfer norms will be effective retrospectively? Such a transaction happened in November 2023. Will this be eligible for trail income?
    • Second, what happens to the commission accrued during cooling off period? Am I eligible to receive it post six months?

    Name withheld on request

    Dear MFD,

    AMFI has issued best practices guidelines in which it has allowed AMCs to pay trail commission to MFDs if a client transfers his assets from one MFD to another. This circular has come into effect from March 5, 2024. 

    Hence, the transfer of assets prior to March 5, 2024 will not be eligible for the trail commission.

    Also, AMCs can only pay trail commission after cooling off period of six months from the date of transfer of assets by investors.

    To put it clearly, the new distributor will not get the accrued trail commission. This also means that the new distributor will be eligible to get trail commission starting from the seventh month. 

    The commission accrued during the cooling off period will go towards investment awareness. 

    Hope we have addressed your query.

    Regards,

    Team Cafemutual

    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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    Disclaimer: Cafemutual is an industry platform of mutual fund professionals. Our visitors are requested to maintain the decorum of the platform when expressing their thoughts and commenting on articles. Viewers are advised to refrain from making defamatory allegations against individuals. Those making abusive language or defamatory allegations will be blocked from accessing the web site.
    6 Comments
    S D · 7 months ago `
    This in my opinion is unfair. We as MFD put time and energy to assess and suggest right way forward based on current investments of the investor. Then why not remuneration against these efforts. A lock in period of commissions and then remittance of it after 6 months is understood; but no commission at all is not fair.
    chetan kumar · 7 months ago `
    for queries related to portfolio and mutual fund schemes and NRI queries related to OCI/PIO and change in pan status from resident to NRI. anyone can contact us at chetankumar@crwealth.co.in
    Rajesh Sharma · 7 months ago `
    Jiski lathi uski Bais...

    Jab maan aaye tab kuch bhi karo...




    Amvi, Seni
    Anil Patil · 7 months ago `
    It is not mandatory for AMC to follow AMFI best practices guidline as AMFI is not a Rugulator.Most of the AMC will follow it but few will not.So not all AMC will pay trail comission from seventh month of Investor initiated Distributor change.
    Jitesh Thacker · 7 months ago `
    What about old transferred AUM of investors ? Commission will be paid on it or only on the AUM transferred after March2024 circular.
    InvestAir Funds · 7 months ago `
    I am not interested in if the commission goes to the new MFD or the olde one, my concern is where was this money going so far and where it will now go for six months? Why AMCs will keep it with them?
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