MF News SEBI introduces direct plans and bans upfront commission in PMS

SEBI introduces direct plans and bans upfront commission in PMS

PMS industry will move to all trail model to compensate their distributors

Nishant Patnaik Feb 14, 2020

SEBI has banned upfront commission in PMS and asked the PMS industry to move to trail model to compensate their distributors.

SEBI clarified that such a compensation has to be made by fees received by portfolio managers (from scheme). Also, PMS and distributors will have to ensure that prospective investors are well informed about the fees or commission earned by their distributors for on-boarding them.

Currently, mutual fund distributors or individuals who have cleared NISM Series VA exam can become PMS distributors.

In addition, SEBI has asked the PMS players to introduce direct plan. In a circular, SEBI said, “Portfolio managers shall provide an option to clients to be on-boarded directly, without intermediation of persons engaged in distribution services.”

In fact, PMS players will have to prominently disclose about such an option in their disclosure documents, marketing material and on their website.

The expense ratio for such clients will be less than regular clients who invest through intermediaries.

All these changes will come into effect from May 1, 2020.

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19 Comments

Suneel tambay · 4 years ago `

SEBI should cancel the licences of all independent advisors as they think the country & the industry doesn’t need them. The way things are happening since last few years it will be a reality very soon.
Wonderful job please keep it up, the credit of making few lakh advisors jobless will be surely to your account.

Vishal Singh · 4 years ago

Very well said Suneel Tambey. A survey done by an esteemed MBA institution Students says that more than 1 lakh people have lost their jobs in past 2 years in the field of broking and advisory including back offices. This is a matter of big concern and the Ministry of Finance, HRD ministry and Prime Minister are unaware of this situation. Watch dog also needed on regulators

Rajan yagnik · 4 years ago

In Asia there is no direct plan as such and in India where investor is making decision of investment by looking his relatives or 5 star rating,there how you can impose direct MF industry is standing on the legs of Advisor who bought investor in MF and now they don't need them really hats off

Manish Mittal · 4 years ago `

Sebi thinks that investors are well educated. I think their expertise had given the advise to FM to abolish 80c 80D too because they think investors will buy insurance with their needs only.
This govt is nit taking its seriously

Balbir Rathour · 4 years ago `

????? ?? ?????? ???? ?? ??? ????? ?? ?????? ???? ??
??? ???? ??? ??? ???? ??? ?? ???? ??? ??????????? ????
???? ??? ???? ??? ?? ?? ???? ???? ???? ?? ???? ???? ???? ???? ???????????????? ?? ?? ???????????? ?? ?????? ???? ???? ?? ??? ?? ???????? ?? ?? ???? ????????? ??! ???? ??? ???? ?? ?? ???? ?????? ??? ?????????????? ??????? ?? ???????? ???? ?? ????? ??? ?? ????? ???????? ?? ???? ??? ????? ????????? ???? ?? ??? ???? ????? ???? ?????????????? ?? ???????? ?????? ???? ?? ??? ???? ??? ??? ?? ?????? ???? ?? ??????!

Balbir Rathour · 4 years ago `

Aditya · 4 years ago `

I’m an AMC guy n I strongly feel that Role of financial advisor is very important in financial planing. I have come aross my people have make their investment decisions based on others experiences.

Sometimes they invest in MFs, but they are never aware of the risk associated with the investment. These type of people track their investments on daily basis. Incense they are making notional loss, they withdraw their entire investment n they don’t turn back to MFs any more.

That is why I believe that Advisor is very much required to has hold such investor to my right decisions in financial planning.

Varun Agrawal · 4 years ago `

I am waiting for the suggestion of SEBI to government to introduce direct tax and reduce tax rate which would be beneficial for tax payers. Rules should be one for everyone. There must be direct tax rate and indirect tax rate so that person who pay the tax from their hard earned money can save money. I want everyone to raise their voice to make single rule for every department.

jaideep · 4 years ago `

SEBI should now ask the government to have direct plans for everything, better for the common man. Banks should introduce platforms for direct lending by investors to borrowers, fixed deposits should be restricted, as banks take their cut, so investors should be given the option of 'direct lending.' This is just one example. Essentially SEBI seems to devote more time to micro managing businesses under the guise of investor interest. I would prefer it if they actually did their job of introducing more liquidity in the retail debt markets or ETF markets or better compliance and supervision of the equity markets.

Rishabh · 4 years ago `

Instead of educating investors the government is in totally opposite direction, why not come out with an exam and make a investors capable to understand pros and cons of investing and if a person successfully qualifies accordingly allow him to go direct else opt for a channel route which makes both the investing person and intermediary/advisor more accountable. Instead government is trying easy way out. Definitely not in the best interest of investors and the financial community.

manish.samant · 4 years ago

Very true.. good suggestions.

Subhasish Mondal · 4 years ago `

I would like to invite SEBI delegates to visit my village where from I am doing MF distribution business.
Then actually SEBI can feel the usefulness of IFA. Common people in village yet not heard the two word MUTUAL FUND. They always afraid of making investment in market share.
Even Common people (also educated person) compare MF with the Cheat Fund.
99%of them are not aware about investment or no idea about what is investment. They have LIC agent for their endowment policy.

Jayant · 4 years ago

SEBI officier and employees also work without salary, then they will know,
To reduce the commission or,
What happens by bringing a direct plan

Hari om · 4 years ago `

Today, in the country when there is a problem of employment in front of the youth, in this situation, SEBI is insisting on reducing the commission of distributors and bringing a direct plan.

RINKU DEVI · 4 years ago `

SEBI officier and employees also work without salary, then they will know,
To reduce the commission or,
What happens by bringing a direct plan.
non sense by SEBI. all of you please write a mail for FM nirmla sitaraman.
why reduce commission all distributor live on air ??????????

Vishal Rastogi · 4 years ago `

Unfortunately , their is no work left other than eroding Advisor's income ............other they failed in checking the biggest scom under their nose by Top inst. like Karvy, BMA.etc.... so this is the best they can or only doo with.!

NARENDRA SINGH RAWAT · 4 years ago `

GOOD WORK

Arun · 4 years ago `

SEBI should introduce direct plans stock market to buy shares without broker.

Arun · 4 years ago `

SEBI should cancel CPE fees and why should distributors mandatorily patronise parasites kile NISM and Training organisations.

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