Ban on upfront commission seems to have subdued interest in becoming mutual fund distributors.
AMFI’s latest data on status of registration of new ARN shows that while the industry has added 3346 new distributors under individual category in the third quarter of FY 2018-19 i.e. October-December 18, 5555 (July-September 2018) and 5410 (April-June) individuals joined mutual fund distribution business in the first two quarters of FY 2018-19. A rough calculation indicates that the industry has witnessed a decline of 40% in terms of number of new distributors.
Though it is too early to say that this decline is due to upfront commission ban, going by the first indications, the short-term impact of the move is not in favour of the industry.
The mutual fund industry has added 14,311 new IFAs in the first nine months of this financial year. Overall, the industry has added 43754 new distributors including 28,500 employees of corporates and IFAs in April-December 2018.
In FY 2017-18, while the industry added 20339 new distributors under individual category, 57,831 joined MF distribution business including IFAs, corporates and employees.
Further, AMFI data shows that nearly 3100 individual distributors chose not to renew their ARN in the first nine months of FY 2018-19. This is much higher than what individuals did last fiscal. AMFI data shows that 2475 distributors did not renew their ARN in the entire FY 2017-18.
Meanwhile, 25660 ARNs got renewed in April-December 2018. Of these, over 15098 ARN renewals were from the individual category. In FY 2017-18, 26,712 ARNs were renewed.
As on December 2018, the mutual fund industry has over 2 lakh ARNs of which over 81800 lakh are individual distributors and 1.03 lakh are employees.
All these distributors are KYD compliant ARN holders.
Status on new ARN registration
Quarter |
No. of individual distributors |
April-June |
5410 |
July-September |
5555 |
October-December |
3346 |
Total |
14311 |
Source: AMFI