Mutual fund commissions vs. Unit linked plan commissions

Continuing my dialogue series…

Journo: Subra do you not think the life insurance guys get pampered?

Subra: Why do you say so?

Journo: 40% of the contribution as a commission is too much, do you not think so?

Subra: What about products with 122% commission?

J: Not possible in the financial service industry… least not in India

S: In India, in financial services, existing product, ….dekhnewala chahiye that is all.

J: Which is the product?

S: Mutual fund….

J: Will you please explain…???

S: take an excel sheet calculate for an SIP of Rs. 10,000 per month for 30 years…fund growing at 12%..0.5% trail…see the commission from the 21st year to the 30th year…it ranges from 41% to 122%.

J: OMG! This cannot be true…why is the media not talking about it?

S: You are the media…why are you asking me. Just do your homework…use excel

J: what is the catch in what you have said….can I do a story.

S: First understand..then write. What is wrong is the Time value of money has not been considered, nor has tax been considered. However anything that you do…mutual fund commissions are better than life insurance business. The smart online distributors like (they did not want to be mentioned) know that..

J: Such a revelation sir….

S: Imagine you spent Rs. 7 lakhs on an MBA degree….

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21 Responses to “Mutual fund commissions vs. Unit linked plan commissions”

  1. Hi, I didnt understand how it 41% is arrived at. The commission is 41% fo what? When I did the calculation, at the end of 20 uears, the net invested amount is 24Lac; AUM is 1crore (at 12%) and 0.5% trailing come to 50,000/-. Now if I take the percentage of 50,000/- on 24Lac, it comes to be 2.08.
    This article, by not giving clear picture, is it not acting like another ULIP agent?

    Kinldy clarify.


  2. 2 years after drkhann’s comment, I found a cheap index fund – IDFC Nifty – 0.25% expense ratio.

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