The Mutual Fund distributors are the biggest risk currently. The Rs 25lakh cr industry will double in the next 5 years but the distributors will number will come down to 1/3rd from the current numbers. Old assets and new assets in both segment brokerages have been reduced significantly which is a threat to the survival of the community. 

AMC and clients will both remain advantageous from the new reduced brokerage structure but the ones who helped to build this the industry will be out of the market soon. The question is no longer restricted to which AMC has chopped the hands of the distributors but the final result that the bugle of death for the distributors have been blown.

The dramatic cut down of the brokerage raises a significant question about the long term outlook of the AMCs towards the distributors.

By cutting down brokerage and keeping around 50% to 80% of TER the industry has been able to reduce the outflow of the brokerage being paid to the distributors.  The CIO, CFO, CEO, Fund Manager and even the National Sales Head of the AMC gets a significant amount of remuneration but nothing has been chopped at their end. The below list itself speaks for the same.

The salary figures are old and the new ones will be high and this has grown also in the current year. How the AMC does is able to pay such high salaries to the CIO and CEO and Fund Managers? Why these salaries are not being reduced? Well, the distributor is killed for the sake of these people through the reduction of brokerage.

The industry leaders think that as the size of the industry is significantly high and clients are being acquired through a digital medium the so-called distributors are no longer required in this industry. The mutual fund has been one of the bread and butter products for the 10000+ distributors. SEBI in its circular has asked to cut down TER but the way it has been reduced by the AMC that it turns out to be a question mark of survival for the whole distributor fraternity.

The significant rate cut down by the AMC has zero impact on the AMC itself. Rather they are keeping 50% to 80% of the TER with themselves.

Its, time for the Distributors community to raise voice about the disastrous revenue structure created by the AMC. The 2nd generation of the distributor community is reluctant to run the business.  The way the brokerage on old assets is being reduced that client servicing is now impossible.

Many AMC has come with zero exit load strategy for the transfer of investments from Regular to Direct. Well, what do the AMC leaders want to communicate that we are no longer required?

Brokers will stop the MF business soon.  The industry sales will be impacted for the short term and the larger impact will come when future inflows will get dried due to the wrong decision in a scheme selected by the investor.

Distributors should come together to fight against these malpractices and inferior brokerage structure decision taken by these AMC. It finally proves that those who wanted the distributors to be eliminated, finally their true face are now out.