AMCs offer unique incentives to distributors to push sales

Pushed into a corner, AMCs are being forced to come up with unique incentives to boost dwindling sales. Among the goodies—a book on how Google changed the world!

It is now common knowledge that distributors and fund companies have found themselves in a state of disarray, post the entry load ban on mutual funds. With little or no revenues forthcoming through sales of mutual funds, distributors have lost the incentive to push these products. Faced with distributors’ apathy, fund companies are seeking innovative ways to incentivise distributors into selling their products.

DWS Investments, the mutual fund arm of Deutsche Asset Management, in a tie-up with NJ India, was running a unique offer earlier this month. In order to boost the systematic investment plan (SIP) applications, NJ-DWS were offering a free book ‘How Google Changed the World’ for every three SIPs logged by the distributor. This offer, which was only for NJ Fundz Network Partners, was applicable on a minimum application size of Rs1,000 per month (Rs12,000 per year). This offer is trivial compared to what some of the other fund companies are doing.

Religare, for instance, went all out to woo distributors to sell its product, Religare Monthly Income Plan (MIP) Plus. As an ‘early bird incentive’, Religare offered cash emoluments for certain number of applications received before 16th April. For three-nine applications received before that date, distributors were offered Rs75 per application. For applications numbering 10-14, distributors were entitled to Rs1,000; Rs2,000 for 15-19 applications; Rs4,000 for 20-49 applications and Rs10,000 for more than 50 applications.

The same product had another incentive structure in place depending on the volumes gathered by the distributor. For single applications up to Rs99,999, distributors were offered 0.75% as commission. For mobilising applications worth Rs1,00,000-Rs4,99,999, the commission offered was 1%. Distributors mobilising more than Rs5,00,000 for this product, up to Rs1 crore, were given 1.25% commission as incentive.

Moneylife has previously written (see here) about how fund companies are in competition to organise junkets for distributors, hoping to enthuse them to sell their schemes. Unable to pay entry loads to distributors, asset management companies (AMCs) were spending money on flying distributors to exotic Indian and foreign locations.

While organising such extravaganzas for distributors is raising eyebrows, offering innovative incentives is an unavoidable and necessary outcome of the current regime. In the absence of such incentives, the mutual fund industry will virtually come to a standstill.




7 years ago

u should work for incresing penetration rather than sensiting all petty matters

sanjay pandey

7 years ago

in this matter SEBI is main villen,sebi stop all comm. & say-dist. charge fees from investor,but sebi not laid any method they abide 2 investor 4 pay the dist.fees, so, dist.'s have 2 option- quick out from ind.,or do mis-selling. after all distributor is not a social- worker,one time M.F. dist. WAS "HERO OF FIN.MKT." but now he is "ZERO"or "BECHARA".who is responsible 4 it only & only-SEBI.


7 years ago

sebi descision no etry load was wrong double standarad not allowed why insurance co.paid agents in ulips


7 years ago

i find this disgusting. journalists- please understand nothing is free in this world. it was irrational of SEBI to ban the entry load. they did for obvious reasons. finishing IFAs.will they succeed- a BIG NO.

now dont tell me journalists are angels.

Mit Sanghvi

7 years ago

Some AMCs are currently offereing Rs 100 per app on each SIP logged in.


7 years ago

Kudos to our market regulators and retired/super annuated Babus who extinquished the IFAs. The AMCs are thinking out of the box and innovative in wooing/rewarding the exitinct IFAs

SAIL to rationalise workforce

The State-run unit is considering manpower rationalisation to remain globally competitive, improve productivity and bring down costs

State-owned SAIL is rationalising its 1.16 lakh workforce across the country to remain globally competitive, minister of state for steel A Sai Prathap informed Parliament today, reports PTI.

“Rationalisation of manpower is a continual process in SAIL. It is being undertaken with the objective of remaining globally competitive, improving productivity and bringing down costs,” the minister said in a written reply to the Lok Sabha.

SAIL had manpower strength of 1.16 lakh on 1 April 2010, he added.

In a separate response to the House, he said that all the steel PSUs undertake rationalisation of manpower from time-to-time to remain globally competitive. But besides SAIL, he did not give details about any planned workforce rationalisation in the other steel PSUs.

“With rationalisation of manpower, productivity of SAIL is likely to be increased. Modernisation & expansion is also underway in SAIL, which will also lead to an increase in production and capacity,” Mr Prathap added.

SAIL is undertaking a Rs70,000-crore expansion programme to augment its annual steel production capacity to about 23 million tonnes (MT) from the current level of around 14MT by 2012.

Among the other steel PSUs, NMDC has lined up a Rs-30,000 crore investment plan to augment its iron ore output to about 50MT from the current 30MT. The mineral producer is also in process of setting up a Rs 15,000-crore steel plant in Chhattisgarh.

RINL, on the other hand, is doubling its annual steel production capacity to about 6MT at an estimated investment of Rs12,000 crore.

“These are expected to add to creation of new employment opportunities in the coming years,” Mr Prathap said, without specifying the hiring target of these PSUs in the current year.


Fifty-six Indian companies in Forbes ‘Global 2000’ list

The list of the biggest and most powerful listed companies worldwide has been topped by US banking giant JPMorgan Chase and is followed by General Electric, Bank of America and ExxonMobil

A total of 56 Indian companies, including Reliance Industries and State Bank of India, have been named among the world’s 2,000 most powerful listed companies, according to US magazine Forbes.

The ‘Global 2000’ list of the biggest and most powerful companies worldwide has been topped by US banking giant JPMorgan Chase and is followed by General Electric, Bank of America and ExxonMobil, reports PTI.

Among Indian high performers, Reliance Industries leads the pack and has been ranked at the 126th place in the global list.

Other Indian companies named in the list include State Bank of India (130), ONGC (155), ICICI Bank (282), Indian Oil (313), NTPC (341), Tata Steel (345), Bharti Airtel (471), Steel Authority of India (502), Larsen & Toubro (548) and HDFC Bank (632).

The global rankings span 62 countries, with the US (515 members) and Japan (210 members) dominating the list as usual, although the number of companies from developing nations in the list is fast increasing.

This year, the countries that gained the most ground are mainland China (113 members), India (56 members) and Canada (62 members), the magazine said.

The Forbes ranking of the world’s biggest companies used an equal weightage of sales, profits, assets and market value to rank companies according to size and this year's list reveals the dynamism of global business.

“In total, the ‘Global 2000’ companies now account for $30 trillion in revenues, $1.4 trillion in profits, $124 trillion in assets and $31 trillion in market value. All metrics are down from last year, except for market value, which rose 61%,” Forbes said.

Two companies from the Anil Ambani Group, Reliance Communications (742) and Reliance Infrastructure (1,702), have also made it to the list.

Other Indian companies named on the list include State-owned Punjab National Bank (695), Tata Consultancy Services (741), HDFC (783), Infosys (807), DLF (923) and Hero Honda Motors (1,571).




7 years ago

what is about investment mlm companies?there are many companies cheating the people what is govt s role are they watching only &corrupted leaders maneging scam guide plz

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