Delay in commission impacting MF businessNo. of comments:5 Sandeep Gandhi, Rajkot, SKIFAA On 27-Mar-2017I am raising this issue for the attention of AMCs on behalf of Saurashtra Kutch IFA Association, and would like IFAs and associations who believe this is true in their areas too, to support this suggestion.
We have observed that many young IFAs are focusing a lot on General Insurance and only next on mutual funds. Young IFAs have EMI commitments, all of which fall due in the first 7 days of each month. General insurance companies pay out commissions twice a month. AMCs usually pay out by the 7th, but as we all know, smaller amounts are actually disbursed only around 10th of the month, sometimes later. This money invariably comes too late for their EMIs, while GI commissions which come twice a month, actually help them meet their EMI commitments. If AMCs want young IFAs to focus more on mutual funds, they need to find a way to pay out commissions by 1st of every month - to all distributors - irrespective of whether the amounts are large or small. If that cannot be done for any reason, let AMCs also adopt a policy of paying out commissions twice a month - lets say on 1st of every month for the 1st to 20th of previous month and then on 10th of every month for 21st to 30th of previous month. In March, all AMCs have changed their cutoff and are paying by 31st March to suit their own compliance and accounting needs. They can similarly find more flexibility in their accounting systems to ensure that small IFAs get either all or at least the bulk of their commissions by the 1st of every month. A simple step like this can help young IFAs focus more on mutual funds than on GI - which is what our fund houses want anyway.