ugust 1 has arrived, and many fund houses and distributors are exploring their creative side to come up with a fee structure. On one hand, fund houses are looking for ways and means to compensate distributors for bringing business. On the other hand, distributors are planning to charge fee to the investors to run their business.
Some of the steps which the fund houses may take include:
* Increase the exit loads. However, it should be recalled that only 1% of the exit load charged can be used for meeting expenses including distributors' commission. In fact few fund houses have already announced an increase in the exit load.
* Compensate distributors by paying upfront commission out of their own pocket
* Increase in trail commission paid to the distributor.
Many distributors are also planning to charge a fee to the investors for the services rendered by them - obviously after negotiating with the investors.
The big question amidst all this confusion is - What should investors do? We believe, banning of entry load has come as a never before opportunity for investors. Earlier investors were forced to pay the entry load irrespective of the quality of services offered by their distributors. But now, the investors can decide the amount of commission depending on the quality of service and advice offered to them.
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