Aii above given tips to AMCs are correct & should be fallowed rgds

veri good idea

Good suggestion,Amc should not rush for no.1 in returns & take higher risks.fm should look for safety & conservative returns.

Excellent suggestion for AMC you have given I like it. I think all AMC should take clue and follow from this.

I do fully agree with Mr. Dhiraj and hope the AMCs will see the writing on the wall and take remedial action for the betterment of all stakeholders

i do agree with the statements. ICICIPRU AMC has withheld my incentives since Mar2012.

Mr.Dhiraj Mittal, suggestions are valid. It seems the majority of serious distributors/advisors are demanding TRAIL only model. TRAIL ONLY model is a simple solution to so many problems, what MF industry is facing now. i.e, mis selling, unnecessary churning, lack of accountability on performance of funds etc., If AMCs really wants to encourage good practices they should implement this. It is in the AMCs hand, no one stop them to start good practices in the industry. Exit load may not be a big problem to the retail investors’ point of view. Moreover, it will encourage the long term investors. As an advisor we should do proper research before recommending the funds to avoid unnecessary re balance of portfolio.

Thanks, Dhiraj Mittal this is very excellent suggestion for AMC you have given I like it.

very good points, very valid too . what next , , , this excellent article would get into the archives of wealth forum along with other such articles. Next week, another such article, another round of suggestions. But, is anybody listening? Good way to remain occupied when nothing seems to change.

Very well said Dear Mr. Dhiraj. High level of consistency is required in the brokerage structure. AMCs should stop all those brokerage structures which can encourage churning. Because of higher payout in first year churning is rewarded.

AMCs MUST take up investor education in a Big way.For this they may appoint college students with a good stipend. IFAs cannot create investor awareness.Education must be given by one who does not have a Selling interest. We print "Mutual fund Investments are RISKY" OK but someone has to tell the about the REWARD too ! The reward part must be told by a person who is NOT in Distribution.

Well thought inputs for AMCs. I fully agree that with out any structural changes AMCs may tinker the brokerage with minor variations , but it is unethical to make drastical change on their own violating the precedence and many AMCS are doing the same taking IFAs as granted.

good

It is worth if taken in right spirit.Will go along way in cementing the Bonds for all the THREE (AMC+IFA+INVESTER).

Very well said. I think all AMC should take clue from this.

1)AMC back office staff must be co operative & helpful.. Sometimes they act as supervisors only. If they act as friend/colleague, minor defects may be solved . 2)consistent commission structure is preferable.. Special drives forces canvassors to opt for lucrative offers & may lead to biased selling.

Only Trail Commission that is Meaningful, Please 1:The fact is, when something goes wrong, everyone turns to the favorite "whipping boy", the advisor/distributor, who does not have a voice and does whatever it takes to divert the attention from their own short-comings. Hope this changes, hope the mighty take responsibility commensurate with their strength. Hope there will be a trail commission that starts at 1% and increases with the age of assets. It will be an effective “anti-churn” too. Also, it attracts good talent to the industry and sustains it too.

Only Trail Commission that is Meaningful, Please 1: It is surprising that advisors/distributors are blamed for churning by almost all the sections. The facts tell me a different story. It is not the advisor, who decided to give Entry loads (pre-ban), up-front commissions and other incentives. They have no say at all in these things a few years ago and even now. The fund houses does all these, right under the nose of the Regulator, with their short term objectives in mind, with utter dis-respect for the long term implications. If there is no upfront commission, no entry load and no imbalances that are created by 0.2-0.3% trail for almost a decade old assets (which obviously is an unfair practice as comparatively newer assets are earning a far higher return for the advisors), where is the question of churning?

Service Issues: It is a common practice for me to follow it up, almost with each application submitted, with one of the largest fund houses that I give maximum business to. It eats up a lot of our energy and time, which otherwise would have been well spent with our clients, procuring more business. Service issues are a certain credibility loss and consequently a financial loss too. The experience is almost the same across the fund houses. It is obvious that fund houses do not check their processes periodically/do not try to implement best practices from other fund houses (even if they receive feed back)/do not care much about service issues. Otherwise, I could not find a logical reason for not having common service request forms across the industry even after 2 decades of existence, leave aside the common investment applications (The regulator can pitch in here too).

Exit Load 2: There is a genuine issue of “redemptions in need”, but we know that they are very few indeed. We can not make a majority suffer for sake of even a few genuine cases. “Portfolio rebalancing”, if proper funds are chosen in the first place- don’t need to rebalance every six months, do we? A higher exit load (which tapers to “Zero” after 3 years) is an effective “anti-churn” and it should be welcomed keeping the long term good of industry in mind. The regulator should facilitate a common exit load structure across the industry to keep away manipulations. The urge to provide ourselves some insurance in case of wrong fund selection/to cover up own greed should be resisted. A higher exit load certainly puts more responsibility on us and the challenge should be welcomed as it increases respect for us in the long run.

Exit Load 1: I don’t agree with Mr.Dhiraj Mittal regarding exit load. If a good fund is chosen after due diligence, it is highly un-likely that the fund performance would drop significantly in a span of just 2 to 3 years. If something drops so significantly in such a short span, obviously fund house selection is wrong in such cases. Also, the best funds’ list hasn’t changed much over the past 2 decades (if one has chosen a fund based on a performance of 5 years and above); there may be a few additions and a few deletions. The list almost remains the same.

Good suggestion but without perk it is very difficult to survive and maintain ur family or household Expenses in metro cities so think about perk IE( a salary person who do or donot given the good performence in MF Industry but he get salary in time) in our matter if i do then i will get commission otherwise not So i think we are not the liabilty of AMC but who at service in AMC are liabilty of AMC Think about this fact

Service issue is Prime and hence anybody working in AMC Marketing/Sales team must work atleast 12 months in Operations. AMC also shouild identify distributors in two catagories "Wealth Creation" and "Wealth Protection" and accordingly divide their Sales?Marketing Depts..

I like it and appreciate much. Very well said both for distributor and for MF companies as well. On a 10 point scale I would rate 9 for this article.

yong guy from amc first visit ifa genuinely then ask for business not do wrong reporting to their boss i first advice to bombay boss tell rm to visit with him imeegtely mode 85% rm failled for same in ahmedabad in place like maninagar hardly 4 rm visit hear all repoting thir visit

Oh, This is avery good suggestion for Distributer / AMC aswell as Industries. Congreats. - Pankaj Modi

Good morning Dhirajji, Seasons Greetings ! All the suggestions given are bulls eye! If followed exactly can bring good amount of positive changes in our industry and will surely takes us in right direction.

I remember, there was an article in this website: "rural IFAs will get 2% upfront and 1% trial commission from October, 2012. So their total commission will be 3% for the first year only." But, to my surprise one AMC decreased my trial commission from .8% to .5% and increased upfront from .5% to 1%. Another AMC is paying just .5% more upfront in only 4 equity schemes and trial is same like before. Can anybody explain me what benefits rural IFAs get after October 2012, as mentioned in many medias. My mobile: +919886854097

APPRECIATE THE INPUTS GIVEN, YES I AGREE WITH YOU WITH REGARDS TO TRAIL BROKERAGE MANY TIMES I HAVE FOUND ERROR AND TAKES A LONG TIME TO RECTIFY WHICH INDIRECTLY AFFECTS THE ADVISOR AND HE/SHE GETS SLOW IN PROCURING BUSINESS. RATHER ONE STARTS GIVING MORE IMPORTANCE TO THOSE SCHEMES WHICH OFFER MORE UPFRONT THAN TRAIL..........

Very good observations...but I have doubt if AMCs will understand these facts

There is at times tendency to take a distributor for granted. A fund might perform well , the credit goes to the fund manager and not to the RM. The fund house which does not take the distributor for granted will have the loyalty factor of any distributor. Basically the RM tend to oil the already well oiled heads.

Excellent update to AMCs

You have hit the nail on the right head. All AMCs are on a wait and watch for declaring the brokerage structure from October 2012. The difference in trail ranges between 0.40 to 1.25% for equity. One AMC has reduced the trail as the age of AUM increases. We need to educate the IFAs who still wish to live on trail. It is in the interest of IFAs to keep the compensations as simple as possible and the answer to it is JUST TRAIL....HIGHER TRAIL....TRAIL ON OUTSTANDING AUM ......NO DHAMAKAS OR TRIPS TO PHUKET.