While some distributors have bought software packages to keep track of commissions, others are yet to figure out a way.
IFAs are increasingly finding it difficult to keep track of their commissions earned from the fund houses. Distributors say that it has been a long standing problem of the industry for which a permanent solution needs to be worked out.
While there are software packages available in the market which help reconcile commissions, distributors don’t find them effective enough or just too expensive; most IFAs do not have the wherewithal to afford costly software. A commission reconciliation software can cost anywhere between Rs 30,000 to Rs 80,000 in addition to maintenance costs.
Institutions like banks and national distributors have developed their proprietary software so have a few big IFAs. Vinod Jain, a Mumbai based fund advisor has invested a huge sum to develop proprietary software to reconcile commission.
“There have been cases where IFAs have not received commissions for the business procured by them. One distributor, I know found a gap of Rs 15 lakh in his commission. Calculating how much commission we get from fund houses is a tough task. Very often we have to do it manually,” says a Mumbai based distributor on the condition of anonymity.
Distributors say that there are instances when commissions promised by relationship managers of fund houses do not get communicated to the R&Ts which later creates confusion. This is more often the case where the AMC runs special promotional/incentive program on select products for limited time period.
Some distributors have opted for third party software while others have developed their in-house customized software. But this often involves high costs and not all distributors can afford it.
“Although there are software packages available in the market, none of them have a foolproof solution on brokerage calculation. We have developed in-house software which keeps track of commissions in mutual funds, insurance, FDs, and postal schemes. However not all distributors can afford to build such packages,” says Ritesh Sheth of Tejas Consultancy.
“I have been in this business for more than a decade. It is not possible to buy a software and manually key in all the past data now. Software packages don’t help much. We usually take it in writing from the fund house if any RM promises some commissions,” says a Mumbai based distributor who has a large retail client base.
