Besides disclosure of commission on Account Statement, I also oppose direct sales. How can a product which is subject to market risk can be bought online or over the counter? If one is allowed to buy, then every one below the sky should be allowed to sell mutual funds without any hurdle. SEBI and AMFI may how ever may ask the fund houses to disclose expense which include commission on their product advertisements.

Disclosure of commission has not caused any problem to me as I am established. Many LIC & Postal Agents are offering or forced to offer cuts on their commission. An agent work for commission. When the customer take the commission or its part, he assumes the role of an agent. So the responsibility of mis-selling (or mis-buying) shifts to the customer. Disclosure will promote undesirable practice of mis-selling and mis-buying as some of the greedy customers will like to buy cheaper and would ignore good guidance and hand holding. At the end.. Boss (SEBI) is always right. They are responsible for spreading equity and investment culture in India. I do not know whether they have right experience of sales and marketing or not. I also do not know who is responsible for development and promotion of mutual funds. I bought petrol today. Neither government disclosed how much Custom, Excise and Vat was charged to me nor the dealer disclosed commission.

Govt is inviting suggestions for Union Budget in www.mygov.in till 29 Jan16. Please give ur suggestions for MF advisory & motivate others to do so

i think that in the small city and village not a abroad think to investor that geven commision him to investment.he shall not sustain to this disclose commision .he shall ask question from distributers and demand comission from distrubuters.while Distributers shall destroy him professon.so please if we do somthing?

Dear Sir, instead of justifying every evil thrown upon us or effectlessly crying or blogging, its time to be united, lests stand together against the dictatorship of regulators and govt. amfi web provides us every details of all arn in the country. let few big distributor to take this job to bring all arn holder to one stage by contacting every arn holder and express our voice and action plan . lets do it. "Sangthan Bina Shakti Nahi, Shakti Bina Sunwai Nahi"

WHY SHOULD THE TRANSPARENCY ONLY ON THE PART OF IFA ONLY ?WHY NOT ALL AMC SHOULD DECLARE THE REMUNERATION ,INCENTIVE AND PERKS PAID TO ALL FUND MANAGERS ?

A simple solution is to disclose on AMFI Website the commission structure of say top 100 or 200 distributors by all Fund houses for all schemes, giving their names and ARN codes. This will be transparent for all investors as well as small IFAs and distributors, who will now know how AMCs are biased and squeeze small IFAs to fill the pockets of Banks and NDs. I know this will be opposed tooth and nail by the powerful lobby of Banks and NDs but worth considering

We welcome the disclosure, but it should also mention 14.5% ST deduction from the brokerage. Investors should also know that the Distributors fish out around Rs 5,000/- every 3 years for renewal of license.

Let’s understand the real problem in MF industry as a whole. 1. Very few IFA.s are RA’s and charge their clients but may have fixed their ARN , whatever may be the reason. 2. Most of us do not disclose our commissions in the product sold not of other products & those who disclose their earnings, have to go under the sharp knife of the client. It is very well said by you that one fine day, a Fatwa by regulator will be delivered to adhere to the commission disclosures or face the axes. If only commissions earned are disclosed in account statement, it will open a Pandora box in the market and the client with finest sharpened axe , will only be the winner. I have a suggestion for commission disclosure in account statement if at last it has to be in it, DISCLOSE TOTAL EXPENSES CHARGED TO NAV AND MENTION COMMISSION AS DISTRIBUTION & ADVISING CHARGES IS PAID TO YOUR DISTRIBUTOR/ ADVISER WITHOUR GIVING ITS BREAKUP.

Well thought out way of disclosure. Should be welcomed by all intermediaries and forwarded to AMFI..

I always inform my clients what i will get in the form of trail and upfront.I am welcoming the decision to mention in the soa of mf schemes.That leads to transparency and the investor also able to judge the quality of advice

Sandeep Gandhi, In todays world of information systems , nothing is impossible. The suggestion given by Financial commission is a good one to start. let the distributor take a sign on the commission structure disclosed to the investor by the distributor. NDs and Banks are not comfortable with this idea at all, as they are snatching away the lions share in the overall commission. What at the most the IFAs is getting less than 1%, would not be a concern at all , the disclosures might tilt the balance in favour of IFAs , provided they give good service to their clients.

GOOD SUGGESTION. I AGREE WITH YOU.

The crux of the problem is that the AMCs have comfortably been paying heavy commissions to NDs and Banks , cutting it from the pockets of the IFAs. Also , they have successfully fled a lot of IFAs out of industry by paying the carrot called the upfront , keeping trail very low. So the AUM under the expired ARN codes of IFAs is also ballooning to huge proportion , where , AMCs are not paying IFAs anything. So will these disclosures drive that the AUM under expired codes will have to move to direct class? Now this disclosure norm is raising basic questions on this parity.Disclosure is good for IFAs. By following strict disclosures we can do our business with our heads held high. But will te NDs and Banks be comfortable with this , obviously , No.

Vijay, I think it is impossible for the AMC to mention the commission payable per transaction, as they have many channels and categories. But yes, they can print the disclosure of TER of the scheme. I think the investor should be made aware about the total exps he is paying and not with the bifurcation that what has been paid to whom. Someday SEBI may ask to disclose the marketing team incentive paid on the sales!!! there is one part where in what are the charges share between investor and AMC, which needs to be disclosed. The other part wherein what is the sharing between AMC & distributor is irrelevant for investor. The underline is there should be least levels of commission structures, may grade them and yes the AMC may print the grade of the distributor which will reveal the range of commission. Something like color code to schemes.

I DO NOT MIND IF AMC ALSO DISCLOSE HIS ANNUAL CHARGE ALONG WITH COMMISSION AND TOTAL TRANSPARENCY ON ACCOUNT STATEMENT EVERY YEAR HOW MUCH AMC CHARGE AND HOW MUCH DISTRIBUTOR COMMISSION

Mr. Vijays suggestion is no doubt excellent but can SEBI be convinced that all the distributors are disclosing it to all their clients? There is a big question mark on it because distributors are dealing with clients orally and rarely there are written communication between them and the clients except some email exchange with some. In view of this and if we wish to avoid fatwa from SEBI then AMCs should start disclosing commission to investor in account statement mentioning the same in percentage terms instead of absolute amount. Mentioning of commission in absolute amount may not be in the interest of the industry and will invite cash back but if it is in percentage then it may not catch the eye of the investor. Moreover this disclosure should be only on the 1st statement after investment and not in subsequent statements for the same investment. This way we can comply the SEBI regulation in letter and spirit and in an effective manner that can convince SEBI.

This solution makes sense

Agree with you, but this would be a temporary solution. This will work, as long as Growth schemes exist.... the way things are progressing, very soon trail will also be removed (max 1 or 2 years). I think whomsoever want to remain with this industry, start charging to the investor. Atleast you can meet out your tea-coffee expenses for your office by doing so.

Why only mutual funds need this level of transperency? Will it increase penetration? will it in any way help the investor to select a good scheme? Will it in any way do justice to the IFA in comparison with others selling other financial products? Is it a demand or complaint of the investors? (excluding experts) Is there any example of any product or industry in India implementing this level of transperency and achieving greater success in sales, development, service and satisfaction to the customers? Why not disclose administrative expenses, salaries and perks, allowances, bonuses etc paid to the employees at all levels in the industry to the customers? There seems to be room to feel that this will probably cause many IFAs to rethink about coninuing or joining the industry which is expected by a section of the industry.

indeed a welcome suggestion!

There should be representative of IFA community in discussion panel before making such rules ... Because this guys are heavily paid person and they make policy in AC chamber where on investor come for soa , investment ,etc , no sales pressure ...... Again not think of IFA but think of his family and workers family to them he appointed for AMC services/ mutual fund services .... What a bull shit every now and then new issue comes only targeting IFA ... Why they dont come with issue on AMC, AMFI , SEBI are this all are " doodh Ke dhule" Come all IFA community together before they ruined our Identity ...

There is no doubt that transparency should increase. The questions which regulatory and the finance ministry need to answer are Why the same rules dont apply on insurance products Why PMS are ignored in transparency Does the govt or the regulatory even want advisory and distribution to exist or its going to vanish. Why real estate deals can run with 10% brokerages as well but mutual funds AUM on average fee of 0.75% bother too much. Why banks have been selling Nfo with 8-13% upfront brokerage even in 2015. Why do mutual fund companies operate with 40 employees when they have to serve the Advisors who ought to know everything. What they need is just service for which so many employees are not required.