Majority of financial advisors believe that lower trail commission on assets acquired before 2015 would encourage churning in the MF industry, which is not good for MF investors.
Post rationalization in TER, many IFAs claim that while they get close to 80 bps trail commission on assets mobilized after 2015, they get between 15 and 30 bps on assets built before 2015.
‘What would be the impact on lower trail commission on assets acquired before 2015?’ asked a poll run on Cafemutual.com.
Close to 4100 IFAs participated in the opinion poll. Of these IFAs, 61% or 2502 IFAs feel that discrepancy in trail commission across assets acquired before and after 2015 would encourage churning in the MF industry.
However, 1360 IFAs or 33% of the total respondents said that only a fraction of distributors would churn for better commission. They believe that the majority of IFAs will advise their clients to continue their investments.
Just 220 or 5% distributors feel that this would have no impact of lower commission on mutual fund distribution.
Here is the snapshot of the opinion poll result.
What would be the impact on lower trail commission on assets acquired before 2015?
It will encourage churning in the MF industry: 2502 votes, 61%
No churning: 220 votes, 5%
Only fraction of distributors would churn, the majority will advise their clients to continue investments: 1360 votes, 33%
