Today we will se how the other (vociferous!) distributors will react: These are the smaller distributors who were getting 2% (atleast) to about 4% as marketing fee. However this money was coming from the client – and many clients did not know about it. However many distributors were giving all their ‘income’ back to the customer as ‘passback’ so the really small distributor will not be hit hard. The fund house will give him / her 1% upfront comission – so the ‘passback’ will be very close to nil. The trips to Goa, Egypt, West Indies, South Africa, …will continue and this comes from the ‘chargeable marketing expenses’. So frankly to some people in this section it will not make much of a difference. There are some who ran this business by keeping all the upfront commission – they will start charging for all the work that they do. Frankly now the client will pay a courier charge, a printing charge, photocopying charge…etc. Some of them will join together and create ‘FAAIDA”, IFAGALAXY, AMFIA – Madurai, AMFIA-Tamilnadu, etc. Of course there are such organisations in other parts of the country also. Faaida was an attempt to bring all such small bodies under one umbrella.
However their attempts at telling the Finance Minister asking him to intervene sounds like a joke. The biggest worry is for the employees of the fund houses who were liasioning with the IFAs. There may be a huge reduction of staff by some fund houses. Smaller fund houses may still pay 2% commission to small distributors – it is much cheaper than to have a full time employee to cover Navi mumbai costing Rs. 10 lakhs (oops, it hurts does it not!!?).
Their voices sound like soft drink manufacturers trying to stop Coke and Pepsi, or like Indian Airlines employees trying to stop Jet Air, or like Kirana shops trying to stop Big Bazaar. It is very funny to see mutual fund distributors shopping in ‘More” or ‘Subhiksha’ and crying for protection! Hey as a consumer if you enjoy competition, learn to enjoy competition when you are on the manufacturer’s side.
Technology based selling – website, microsite, blogs, E-mobile will all become new methods of selling. Investors will visit all these sites, etc and decide on which scheme to invest in. Then they may go direct/ Indirectly to a fund house.
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