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
