Mumbai: The contentious issue of charging fee from investors continues to be a heated issue among distributors. This was one of the hotly debated topics besides the much awaited guidelines on foreign investors at the recent gathering of 165 Tamil Nadu IFAs in Trichy under the umbrella of IFA Galaxy.
After the ban on entry load, SEBI had said that investors may pay a fee directly to distributors based on the services rendered by them. This was incorporated in all common application forms as “Upfront commission shall be paid directly by the investor to the AMFI Registered Distributors based on the Investors' assessment of various factors including the service rendered by the distributor.”
A majority of IFAs claim that the above declaration is not turning out to be an effective tool to extract fee from clients. Instead, they suggest including an additional declaration in the form. Distributors claim that there have been many instances of clients directly investing through the AMC after taking advice from them. Some even claim that investors go on a distributor hunt if someone asks them to shell out a fee.
Salem based CFP Balaji K suggests the following format for charging fee which could be included in the application forms.
I understand that as per SEBI Circular no : SEBI / IMD / CIR No.4 / 168230 / 09 dated June 30, 2009, no entry load will be charged by the scheme to the investor effective August 1, 2009. Upfront commission shall be paid directly by the investor to the AMFI Registered Distributors based on the Investors' assessment of various factors including the service rendered by the ARN Holder.
I have given a cheque for Rs. xx/ - in favour of “Scheme Name “through Mr. XXXXX having ARN XXXXX. I am satisfied with his advice and service rendered to me and I am paying a fee of Rs.XXX to Mr. XXXXX having ARN XXXXX.
The above idea is well received among the IFA community and they have already made a suggestion to AMFI about incorporating the same in scheme application forms. H N Sinor, CEO, AMFI had in a recent interview with Cafemutual had said that they are evaluating whether commission structure could be embedded in the application form itself.
IFA Galaxy set to expand its footsteps
Meanwhile, Chennai’s largest association ‘IFA Galaxy’ recently held a seminar on 19th Feb 2011. Ramesh Bhat, the man helming the IFA Galaxy Group is geared up to start two new IFA chapters in Salem and Kochi. The Salem group will be headed by Mahendra Chand Singhvi. The IFA Galaxy group had floated Trichy chapter back in 2009.
“The Salem and Kochi groups will be headed by the local team itself and will be affiliated under IFA Galaxy. We are planning to set up two chapters in Madurai and Coimbatore. We are also planning to have a chapter in Hyderabad. We want to link south India first. We have got enquiries from Jharkhand too. If we get a good leader from North, we can go ahead with the plan. Once we cover the entire South, we can expand in other states,” says Ramesh Bhat of Aniram.
