Fund advisers ready for less fees to boost sales

Financial advisers are willing to work at reduced commissions on mutual fund sales, in order to boost the mutual fund sales that are on a decline, reports Sandeep Singh.

Financial advisers are willing to work at reduced commissions on mutual fund sales, in order to boost the mutual fund sales that are on a decline, notes IFA Survey 2008 conducted by IIMS Dataworks. However, when Hindustan Times spoke to several mutual fund houses they declined to have received any such of proposal or communication from the financial advisers.

HT Image

Almost a third of the independent financial advisers (IFAs) selling only mutual funds that were part of the survey of almost 1,500 respondents expressed their willingness to consider operating at reduced commissions.

The survey results come as a surprise because the distributor community for long has been raising its voice over the low margin structure on mutual fund sales in comparison to the unit-linked insurance products promoted by insurance companies. Even mutual fund players have raised the need of a level-playing field in terms of the commission structure with the insurance industry.

“Distributors are already operating at low margins and it is one of the lowest in the world,” said Rajiv Deep Bajaj, managing director, Bajaj Capital.

“It comes as a surprise because I have never heard of this, not even for insurance products that command higher commissions,” says Amar Pandit, a Mumbai-based financial planner.

“Low commissions will not attract clients,” said Surya Bhatia, a Delhi-based financial planner. “Commissions are not a challenge as customers don’t mind paying for advice.”

The survey also notes that IFAs believe that selling a mutual fund is easier than selling an insurance plan. Almost two-fifth of the respondents felt that their clients believe that mutual fund returns are more attractive and one third of them say that their clients feel that the commissions are low on mutual funds.