Comments from smaller IFAs on this tricky issue are quite understandable. Their frustration should be more directed towards AMCs. The AMCs made them sell substandard products.AMCs NEVER trained IFAs with basics of financial planning. SIP/STP became popular only when markets and industry went through the tumble of 2007-2013. The only way smaller IFAs can be Big is Investor Awareness and Financial planning. AMCs must train IFAs in basic financial planning and also give financial aid to IFAs to take up Investor Awareness.

I support the idea of an all trail model though I am a marginal IFA (not even small). All trail model will bring down miss selling and will force IFAs to build long term relations. Mr.Dalmias suggestion to support a new IFA is really good. In fact I would say that the industry pays Fat salaries to relationship managers these could be scaled down and paid to IFAs. I would also strongly urge the industry to support smaller IFAs with financial aid to take up Investor awareness programs.

Dear Vishal Sir , No confusion , its simple math , all trail model is the BEST for you. I hope you agree that one year is not long term! The impact of full trail will be realised just with in the first year itself. To have a taste of it , just start putting in some of your business in all trail model funds , you will realise it yourself(I have done that already). Do not waste any more time.

Sir, It may be good in long term but disaster in short term specially for smaller distributors.......& little confusing too .

upfront commission upto 1% or 1.50% and balance in trail model, trail also increased on year basis ,it will reduce charrning mostly done by new ifa,bankers, & broking agent having no arn.claw back should be abolished its doing no good to investors amc increases time of clawback,it is not good if when investor sitting on 70-150% returns,

The fact is fund houses have to pay higher commissions in the only trail format and hence the resistance to this model and the confusion that is being created. Ask yourself this simple question, how many fund houses are giving only trail that starts around 1% to all their distributors (even the smallest distributor included)? If they are not giving it to all, why? You would know what is good for the small distributor.

Upfront commissions and low trail commissions help the big get bigger while the small get squeezed out. If anyone has any doubt in this, please check the amount of commission that top 300 odd distributors are getting on AMFI site. Their commissions are increasing leaps and bounds every year, while small distributors are getting squeezed out, isn’t it?

If upfront commissions are good for IFAs, the number of active distributors which was over 1 lakh some 6 -7 years ago would not have fallen to mere 5000 now. As a matter of fact, if upfront + trail format is good for new entrants the number of distributors should never have fallen and it should be have been increasing all the time.Is that the case? After all upfront commissions are a predominant mode of remuneration since the inception of the industry and even now.

The same old story of upfront commissions being needed to protect new IFAs ! If the fund houses really want to encourage new IFAs let them give 3 % trail for the new entrants in the initial 5 years of their business. Who is stopping them?

Only trail model is a very powerful entry barrier. Who knows it could turnout to be a most potent weapon to flush out the remaining 5% who have chosen to continue with their ARNs

Those who talk about all trail models are either national distributors or IFAs with large AUMs, both anyway assured of good income streams. Even the AMC officials have a regular monthly salary. It hardly gives any of the above the right to judge how IFAs should earn their livelihood. The average IFA cannot live off an all trail model, that is an established fact which neither AMFI nor the AMCs nor the regulator want to accept. All trail models will save money for the AMCs and add to their bottom line, at the expense of distributors. Finally, AMCs exist because of the sales their distributors make, otherwise they fold up as we have seen, so why this arrogance and tendency to dictate terms to IFAs? Let the upfront plus trail model continue and lets not have models quoted from other countries to justify the opposite.

I am curious to know, in Mr.Dalmias opinion how much AUM an IFA should build in five years having only small retail clients.

forgot Seed capital AMC do not interest to pay courier charges & other charges for their out station distributor

I do not support the idea of full trail model. There must be upfront and trail. If it is trail only then the product should have strict lock in and longer duration commitments. It is futile to remain in the business only on the basis of hope that AUM will grow, industry will grow and rules will not be changed abruptly. It is always better to have one in the hand rather than two in the bush. No business is run without any income atleast to cover the cost. If at all only trail model is being forcibly implemented then implement it in all financial products in the country. Show courage to scrap upfront commissions in insurance.

Lets start by introducing all trail models for IFAS who want to migrate to an all trail model voluntarily ASAP. Lets do away with various Promotional incentives- which is very fair , to this category of IFAs. It is better to segregate Banks from the IFA fraternity in this discussion - they are 1000 pound Gureillas in the room and not worth this discussion getting hijacked. New IFAs hardly contribute any business however , having said very rightly as Brijesh, Pawanji says- they need to be incubated which is a tactical play because we all started new sometimes. I would be delighted with an all trail model and hope AMCs take necessary voluntary steps. Why wait for guidelines for a good thing.

Dear Sir I think the most simple & practical idea which can be implemented without any difficulty from day one is to categorize all IFA on AUM basis i.e say once they reach 5cr or 10 cr or whatever then all future brokerage would be in trail model only and for non Individual Distributors it would be all trail from day 1.

Idea of seed capital is practical and has been used by insurance industry quite successfully

Continuation..... It may also be considered that AUM beyond 10 crs will necessarily get only trail model or new budding IFAs may get upfront + trail upto 5 years or upto 10 crs of AUM (whichever is earlier) to sustain/remain in the industry.Radical/ frequent changes in the revenue model of the IFAs will discourage and demoralize IFAs and subsequently it will be detrimental to the MF industry.

I am of the view that employees of the AMCs will suffer more in their career and their prospect and promotion than that of an IFAs if the MF industry does not grow fast and smoothly. Industry should think how to embrace atleast 5 lacs IFA in a 3 to 4 years time span. This will translate into more business, more profit to the AMCs and subsequently more wages, more branches and more prospect for the employees. But, this will not happen if you now and then start screwing IFAs. The idea of seed capital may be implemented to attract new IFAs. In LICs career agent model some monthly emoluments are given in a reducing manner upto 36 months. It is somewhat like a seed capital to sustain in the industry. So, its a good idea and may be introduced. It will be a one step forward to embrace 5 lacs IFAs.