We, The Distributors of  Mutual Fund products, are a very funny group of animals.

The Mutual fund industry deals with 3 major categories of distributor animals. One is called ‘bank’ and one is called ‘the national distributors’. Here it is the Mutual Fund which has to go and meet them. The bigger banks and distributors make them wait for an hour before they meet them.

However we are the 3rd animal in this sub kingdom of distributors. We are an endangered category. There is no clear census ever done, but many organisations will tell you that there are 40,000 of us, some will say there are 18000 who have a clear collar (collar is called KYD – where we are finger printed so that while writing our obituary details can be clearly provided).

The truth is we survive on money, and only about 4000 of us receive AT LEAST ONE CHEQUE in 6 months from any of the 43 mutual funds. This is actually far far below the Indian standards of a living wage, but we bravely put on a front of being successful.

Frankly only 500 of our strong brothers matter. The others are treated very shabbily by the fund houses. We are never invited to any parties or functions – except at the last moment when they realise that some food / booze is getting wasted. Yes we get the food, but normally served as left overs. It was not originally prepared for us you see.

When we give applications low level people in the MF houses look at us exactly like the durban at Leela Palace looks at a guest who comes in an Indica or a Nano. Some of us have Mercs also, but that is seen as a lucky deal, not as a real asset.

The client looks at us as glorified clerks who will fill up the form, collect the cheque, etc.  Some clients pretend to listen to us – but largely we do not get paid by the clients because they think the fund houses should pay us. The fund houses do not pay us because they think the clients should pay us.

Clients think they do not need us – and they can pick the funds directly by themselves. Sure they can. Afterall in a family portfolio review happens once in 33 years – by that time MOST of us would be dead.

So if fund houses do not like us, and clients think they do not need us, why are we still around?

Good questions.

There are some of us who are like the hen. We think that the sun rises because of our morning call.

Soon it will only be the banks who will sell mutual fund units. Obviously they will do a great job, and mutual funds will get a lot of money. In fact some of the money will even come direct.

The mutual fund industry itself is a fantastic, service driven industry. Their performance has been fantastic over the past few years – recently the employees were rewarded with huge bonuses. We are talking about the employees, of course.

Some of us are also well treated. In fact this Sunday some of us will get to eat good 5* food. For some of us the dal chawal is not a great thing, but what the hell.

Did you notice I did not speak about the Investor?

Poor guy he is still seeing the Yacht brochure 🙂


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  1. But in an ideal world a distributer is not required. In most cases distributer is needed by fund houses to reach the investors who cant invest directly or reach potential investors. Financial planning is different from distributing and once the planning is done (by a consultant or by self) distributers role is just collecting payments. Unlike equities, mfs dont require much tracking. I do tracking once every April and shift to winners overs last 2,3 years time frame. While Past performance doesnt guarantee anything, more often than not they indicate future relative performance among schemes if your aim is to be in top 25% of the funds. If something changes like fund manager change, you will catch it in yearly reviews if the new one is not as good as the old one.
    I am looking forward for how this direct schemes pan out from Jan 1 2013 (though didnt see any anouncements sofar). The 0.5% trail commission saving is not a small thing. I might move all my funds from icicidirect to direct route. Only value add from icici direct right now is consolidation of your funds at a single place.

  2. Subra Sir,

    How can you put so much sarcasm in such a small post,amazing,
    but most of the people will not understand will they?

    I do not know why AMFI exists & what it has done for anybody’s good.

    MF distributor is not a job in any case it can at most be a hobby, where you get enough money for a visit to a good Five star once in a while, I feel very sad for people who are doing it as a profession very very difficult to do this.

  3. Super-like this post:).Our system just tries to ape the west by eliminating/reducing brokerage and commissions on distribution financial products without realising that India is a highly price sensitive market and not one where the mass affluent people will be willing to pay for financial advice. Most of them would rather deal with a small time agent who offers them “free” services and is always at their doorstep whenever they require,than pay a small fee to get their money managed by an established financial planners.

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