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  • MF News AMFI to revise best practices circular on commission structure of distributors

    AMFI to revise best practices circular on commission structure of distributors

    After upfront commission ban, the existing best practices circular is no longer relevant.
    Nishant Patnaik Jan 17, 2019

    AMFI is likely to revise its best practices on commission structure of distributors soon, confirmed three CEOs who are on AMFI board.

    Since SEBI has banned upfront commission on October 22, 2018, the existing best practices on commission structure of distributors has become redundant. Hence, AMFI has started reviewing the existing best practices circular to update guidelines, said the CEO of a large fund house.

    Another MF CEO told Cafemutual that AMFI would form uniform guidelines on trail commission payouts of distributors to create a level playing field across fund houses. He, however, said that AMFI would come up with the best practices circular only after April 1, 2019 i.e. after implementation of the new TER slabs.

    Earlier, SEBI has reportedly expressed its concern over steep difference in trail commission payouts and asked fund houses to pay uniform trail commission across the investment tenure. The market regulator is said to have found that a few fund houses have been paying higher trail commission in the first year and lower in subsequent years. SEBI feels that it will go against the spirit of circular to ban upfront commission, said sources.

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    40 Comments
    Amit · 5 years ago `
    I don't know which fund house is paying higher commission. There is decrease of 35-40% in earnings since December 18.. In one blow SEBI has eliminated a large numbers of small distributors. We are not able to go to smaller investors now due to un-viability of MF distribution business..

    Some fund houses are offering 40 Paise trail commission. This meagre amount will not even cover the cost of petrol..
    RAGHUVEER · 5 years ago
    Sir, I am a newly starter of Mf distribution. I diversified from Loan SYndication. we are into home mortgage and business loan provider with tie up with banks and nbfc. If you want to diversify you can join with me for sourcing loan. we provide platforms and training. the payout sharing is very good. we can do the volume business. If interested call on 9945550292 or send an email to srimsmangalore@gmail.com
    Reply
    S.VENKATRAMAN · 5 years ago `
    Due to this activity of sebi SMALL ifa's may switch to insurance business where the commission is lucarative.
    Mangesh · 5 years ago `
    I agree with Amit. With rationalisation of TER, reduction in commission by means of rate cut, banning upfront, etc.has not impacted on boosting of investors portfolio.
    Jagdish · 5 years ago `
    Sebi has killed almost small IFAs in india. To see their wonderful success they will should be sent to other prosperous countries to destroy IFAs Bankers and NDs life and peace. Brainless.
    Rajesh Pal Singh · 5 years ago `
    SEBI is killing small distributor by banning upfront commission . distribution to small investors become impossible because of cost not covered from these small investment
    Sweta Rajesh Shah · 5 years ago `
    SEBI is here to kill the Industry. It behaves as if investor is its first child.When India needs more distributors for development of the industry, with the actions (FATWA) of SEBI the effect is negative on the number of distributors.RIA model, reduction of TER, declaration of brokerage to investors are all wrong decisions detrimental to not only the distributors, but also investors and as a whole to the industry.
    Prashant · 5 years ago
    Investors are not and never anyone's child. It is always the industry participants in polished terms and mutual fund companies in crude terms. All the regulations are just and just to benefit the companies. Basically regulators are to safeguard the companies profits and not investors at all. If distributors are removed than investors become vulnerable and they are and will be at mercy of AMCs. So few companies will rule our country like in USA. All the regulations and rules are just to benefit those companies. What they are showing is just an eyewash that AMCs will lose their margins. They will reduce our brokerage to that extent and further will remove few jobs to keep their margins intact. These moves bring about huge unemployment because we IFAs hire many many people and help economy by creating jobs but regulators are not responsible for them and us so................
    Reply
    SHIV SHANKAR · 5 years ago `
    THIS IS VERY BAD FOR SMALL DISTRIBUTOR.
    S. M. Nagpal · 5 years ago `
    Banning upfront commission is a welcome step. It will eliminate non-serious IFAs.
    However, the IFSs should be compensated with higher trail.
    Vijaya Lakshmi Tallam · 5 years ago
    Sir,even serious IFA also affected badly due to upfront ban.Those who have office and staff are worst affected.They have lot of expenditure but income is meagre now.
    Reply
    VAIBHAV · 5 years ago `
    I think If SEBI concerns on Mf payouts than why ulip brokarge still 5 to 6 % that also put on Aum wise that also reduce why insurance traditional products commission 35% why not you debt fund commission rate.
    Simple SEBI try to paint what they like.
    SEBi should check which products maximum mis sale case registered than finalise the who giving best rates.
    ASHISH SAXENA · 5 years ago `
    These are pathetic steps taken by SEBI, these steps demotivate small IFAs. In 2018 maximum investment in stock market came through by the way of mutual fund,Which was possible only by the hard work of small IFAs, Now they stop upfront commission and reduce Trail commission by 40-50%, wow what a reward given by SEBI, hands off to you SEBI.
    Vishhal Malhotra · 5 years ago `
    Most smallest Fund Houses paying highest trail commissions. Upto 1.8%.
    Karm karo phal ki ichcha mat karo.
    Firstly in order to survive try and sell Debt Funds as quickly as possible and as much as possible. As it would be easy and safe to sell in comparison to equity. Secondly try to sell equity in SIP form. Thirdly and lastly sell equity in Lump Sum. Focus must remain on Debt Funds only.
    Writer is a new, small time retail MF only Distributor, from Lucknow, with AUM of less than 10cr.
    kopparapu chandrasekhar · 5 years ago `
    sebi is killing the ifas community but in lic the agents are offering higher commission to customers how they control but in mutual funds there is small payment of commission but the rules are bigger why the difference please implement the rules in lic also how the original agents are do the business and the staff and binami agents are gone
    Manoj Singhal · 5 years ago `
    Some big sized AMC s are reducing trail commission in subsequesnt years and reducing trail commission
    on old assets which is in industry from 5/1/0/15 years. This practice is not in the interest of distributors
    and it will compell the distributor to churn the portfolio which is not in interest of investors. This type of practice of AMCs should be banned by immediate effect. In this regard one AMC official replied in a query
    of lowering of cost and increase in profit but what about the profit of GARIB DISTRIBUTOR which is doing
    most of the services of investors free of cost.
    MAHESH SANT · 5 years ago `
    Why we are doing this business . Govt. Ban to give commission or brokerage . Instead salary rise thirty time as compared last 25. Year LTC HOLIDAY tour two weekly holiday much more benefits . We r nation builder activist without any other incentives
    chandrashekhar kulkarni · 5 years ago `
    SEBI members r intellectual bankrupt & they know nothing ...sitting in AC office,they are not aware about ground realities....IFA should unite & protest decision of SEBI in one voice.AMFI is weak body organisation,not courage to speak against SEBi
    Ram Pravesh Maurya · 5 years ago `
    Why amfi again ifa
    Why not AMC employees
    What need AMC sales employees in sales business
    While CAMS KARVY..... present all locations in India
    So amfi CAP on sales employees of AMC
    Vandana Anil Mishra · 5 years ago `
    For new IFA it is very hard to survive on such low trail commission-GST .
    VMV Capital · 5 years ago `
    People working in any organisation get increase in salary year after year and those working in SEBI also gets handsome salary. They don't want any dent to their income. They are targeting only our community and reducing the incentive year after year making our life measurable, forcing our fellow members to quit. I think they need to understand that MF Industry is not going to grow without good advisor and Advisors are not going to exist on SEBI's term.
    Malaya · 5 years ago
    SEBI is working like a autocratic nature without basic sense of market competition. This regulator don't want to grow mutual fund and it will helpful for insurance.And everybody knows how mid selling happing in insurance sector.SEBI don't want investor getting good advise from financial planner.
    Reply
    Prasanta Chakraborty · 5 years ago `
    First blow of 10% LTCG on equity and second blow of removing upfront, great going.
    Dixesh shah · 5 years ago `
    I request all to write it to prime minister narendra modi for the same sebi and amfi playing with small distributors...you can get mail id access from google...let the pmo know the matter...
    ARVIND KUMAR · 5 years ago `
    Not only SEBI But AMCs are equally culprit for Advisor loss, They take it as a opportunity, like RMF stopped non stop trail scheme after five years, this was a social security not luxury
    Arindam Chakraborty · 5 years ago `
    Agree with others,Regulation is necessary but MF industry seems to be over-regulated.If u look at Insurance industry then u will be amazed that such lucrative commission is paid with other freebies,where most products are mis-sold in the name of FDs & guaranteed returns.Where lies & half-truths selling pitch is an Art.Banks are leading with such examples. Go & find out.Stop them first if u really care for investors.MF itself is most transparent product where investors get actually RETURNS which MATTERS to their goal.Promote distributors who are seriously believe in long term relationships, encourage them to penetrate every corners of the country bcoz actually the penetration is meagurely 13%.have a thought then implement.
    Nagu · 5 years ago `
    Dear Investors,

    These Mutual Fund distributors are very dangerous. They are looking only for their survival and not think about investor community. In Hyderabad, Few distributors joined as a group ( Its name called HAWA). They are managing 1000cr AUM and demanding AMC's more commission. They are giving wrong advice to investor community and enjoying their life. If others also want get more commission, better follow like HAWA and demand more money from AMC's and loot money from innocent investors. I am trying my best to fight behalf of Investors. HAWA is getting more commission structures. In their last meeting, got tie up EDELWEISS Mutual fund team and got proposal to pay 1.75% to 2 % Commission depends on scheme. They are tie up with Small AMC's and getting more benefit from them.
    rajesh Gupta · 5 years ago `
    The best solution of this problem is to keep B-30 Commission to all cities but for small investors under 10 lakh total invested amount . Trail should also be increased in such cases. Neither investor will get alternative bad product nor IFA will die who is catering small clients.
    Nagu · 5 years ago `
    Dear Investors,

    Please watch this page, then only can get idea about MF Industry back side coin. These distributors are very dangerous. hope SEBI can protect innocent investor community.
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