Contents
- About
- Types of the commission charged according to the MF agent commission structure
- Commission from the client according to the MF agent commission structure
- Upfront commission according to the MF agent commission structure
- Trail commission according to the MF agent commission structure
- One time transaction cost according to the MF agent commission structure
- Mutual fund according to the MF agent commission structrue
- Conclusion
About
MF agent commission structure is the commission that the MF agent earns from the investors and the AMCs (Asset Management Companies). Learn what are the top 10 AMCs in India. MF agent commission structure is full of the commission charged at different rates. Must read on Guide to becoming the Best Mutual Fund Distributor and help customers. Customers have the right to ask questions about the advice the agents give & the agents have a responsibility of explaining. As the agents earn a commission from their investments. Learn what are the other ways to invest in mutual funds.
Types of the commission charged according to the MF agent commission structure
There are mainly 4 types of commission earned on the basis of the MF agent commission structure. These are
- Commission from client
- Upfront commission
- Trail commission
- One time transaction charge
Commission from the client according to the MF agent commission structure
This is the commission earned by the agent from the client. This could be between .5% to 2%. And the investor can negotiate the commission on the basis of the advice that the agent has given. Commission from the client is recurring in nature and the agent earns this commission every time the investor makes a payment.
For instance, let’s say the agent put in Rs.20,000 every month and the commission is 1%. Then according to this, the agent will get Rs.2,000 every month.
Upfront commission according to the MF agent commission structure
According to the MF agent commission structure, this is the commission that the agent will get from the Asset Management Company or Mutual fund companies in the first year. And this commission is included in the total expense incurred in the mutual funds. Whenever you opt to invest newly in any scheme, this amount will be included. The upfront commission varies from companies to companies and from product to product.
- This commission is low in the case of debt funds (0.2-0.8%)
- Medium in the case of equity schemes (0.5-2.5%). Learn how to evaluate the Best Equity Mutual Funds.
- High in the case of the ELSS schemes (1-4.5%). Learn what are the best ELSS mutual fund schemes.
Trail commission according to the MF agent commission structure
Though undisclosed, yet this commission is the primary source of earning on the basis of the MF agent commission structure. The range of this commission is between 0.5-1% and it is paid from your total net worth of asset under management. This commission will be charged even if your money stays invested in a certain mutual fund scheme.
Let’s take an example to clarify further. For this, 100 investors invested a total amount of Rs. 5 crores and the commission trailing is Rs. 0.5%. So, according to the data, the commission charged on the basis of the MF agent commission structure is Rs. 2,50,000.
Furthermore, let’s say due to bad market conditions prevailing in the market, the investors have withdrawn Rs. 2.5 crore. So, in this case, the amount charged on the basis of the MF agent commission structure will be Rs. 1,25,000.
In addition to this, if in the succeeding year, the amount of money invested grows up to Rs. 10 Crore. Then the same commission charged according to the MF agent commission structure will be Rs. 5,00,000.
One time transaction cost according to the MF agent commission structure
It is a fixed amount deducted from the investor’s account. Rs. 100 is charged from new investors and Rs.150 is charged from the existing investors. You don’t need to worry if you are an investor, as this cost is very low. The amount could be deducted once if the investor has opted for lump sum investment of Rs. 25 per month in the case of SIP. Learn whether choosing a lump sum investment is the best for you or not.
Mutual fund according to the MF agent commission structrue
| S.no | Investment | Total AUM@12% | Upfront commission | Trial Commission | Total Commission |
|---|---|---|---|---|---|
| 1 | Rs.1,00,000 | NIL | Rs.500 | NIL | Rs.500 |
| 2 | Rs.1,00,000 | Rs.1,12,000 | Rs.500 | Rs.560 | Rs.1,060 |
| 3 | Rs.1,00,000 | Rs.2,37,440 | Rs.500 | Rs.1,187 | Rs.1,687 |
| 4 | Rs.1,00,000 | Rs.3,77,932 | Rs.500 | Rs.1,889 | Rs.2,389 |
| 5 | Rs.1,00,000 | Rs.5,35,284 | Rs.500 | Rs.2,676 | Rs.3,176 |
| 6 | Rs.1,00,000 | Rs.7,11,518 | Rs.500 | Rs.3,557 | Rs.4,057 |
| 7 | Rs.1,00,000 | Rs.9,08,901 | Rs.500 | Rs.4,544 | Rs.5,044 |
| 8 | Rs.1,00,000 | Rs.11,29,969 | Rs.500 | Rs.5,649 | Rs.6,149 |
| 9 | Rs.1,00,000 | Rs.13,77,565 | Rs.500 | Rs.6,887 | Rs.7,387 |
| 10 | Rs.1,00,000 | Rs.16,54,873 | Rs.500 | Rs.8,274 | Rs.8,774 |
| 11 | Rs.1,00,000 | Rs.19,65,548 | Rs.500 | Rs.9,827 | Rs.10,327 |
| 12 | Rs.1,00,000 | Rs.23,13,313 | Rs.500 | Rs.11,566 | Rs.12,066 |
| 13 | Rs.1,00,000 | Rs.27,02,910 | Rs.500 | Rs.13,514 | Rs.14,014 |
| 14 | Rs.1,00,000 | Rs.31,39,260 | Rs.500 | Rs.15,696 | Rs.16,196 |
| 15 | Rs.1,00,000 | Rs.36,27,971 | Rs.500 | Rs.18,139 | Rs.18,639 |
Conclusion
Although it can be seen that the commission charged grows with the growth in the AUM (Asset Under Management). But it should be kept in mind that the commission isn’t free from the prevailing market condition. Which ultimately might decrease or increase the commission on your mutual funds investments.
We at WealthBucket serves you and guides you to invest your money in the mutual funds market. Our team of experts will make sure you get the most out of your investments. You need not go anywhere in search of any trustworthy mutual fund agent in the market. So, what are you waiting for? Start investing now in any scheme that ranges from investing in equity mutual funds to debt mutual funds and from small-cap mutual funds to large-cap mutual funds. You can contact us at +91 9999379929 or email us at contact@wealthbucket.in.
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