Switched AUM trail commissions: What does it mean for investors and distributors? Sanjay Shah answers

economictimes.indiatimes.com:

Sanjay Shah, CMD, Prudent Corporate Advisory Services, says coming to the question about the impact of a switch on the trail or the remuneration which overall investors are getting, understand that there is no change as far as TR or expense ratio is concerned because otherwise also, the AMC used to pay trail to old advisors. Now, when the assets move to a new advisor, the new advisor will get the trail which is lower of two, the rate of the old advisor or new advisor.
Help us understand AMFI's new circular on the switched AUM trail commissions. Will we see more competition in the distributor space? What is going to be the impact on the commissions expected?
Sanjay Shah: It was a very long-standing demand of all the mutual fund distributors because if you look at it from the investor's perspective, an investor always has a right to choose his advisor/distributor and there could be many reasons for him to be looking for a change. It could be, let us say, the advisor's competency or let us say the advisor has been out of the profession or the investor himself has changed the location or there is a break in the relationship.

Now, till date, the issue was that if the customer moves his assets from one distributor to another, even if the new distributor serviced the customer, he would not get any remuneration. With this new circular, that entire issue has been settled. What AMFI did is that they also tried and captured some of the checks and balances. They said that if there is a broker code change initiated by the