Ideally, the desirable brokerage is the extent of difference between total expense ratio (TER) of direct plan and regular plan. For instance, if XYZ fund offers regular plan at 1.7% and direct plan at 1.2%, its distributable TER would be 0.5%.
However, this does not mean that all the distributors will get trail commission to the extent of difference between direct plan and regular plan of the scheme. In most cases, your trail commission is directly proportional to the amount of the business you generate for a particular scheme. That is, higher the business, higher would be the trail commission.
In the MF industry, the brokerage rate of distributors also depends on your negotiating skills. Those distributors who ace this skill of brokerage negotiation suggest that MFDs must be aware of their position, what they can offer, what the AMCs expect and various such tactics to strike a win-win deal.
Cafemutual's latest book 'Turbo Charge Your Business' discusses the minute details of brokerage negotiation in a practical and engaging way.
The book also includes various chapters on topics such as acquiring new clients, retaining clients, managing business, handling operations and compliance, managing team, dealing with AMCs and getting prepared for the future.
