Dec 01, 2019 05:03 PM
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1) Online Portal - NJ India is a mutual fund distribution network company. It has thousands of mutual fund distributor agent working for them. These agents work in their local region, city or district to make people aware of how investment in mutual fund is better than FD or PPF. They conduct awareness session and then convince people to buy mutual fund from them as they are one of the top 3 mutual fund distributor company. They have a website where you can logon to buy mutual fund and even shares, though their main business is based on mutual fund investment thru SIP. Other investment portals like hdfc, icici, zerodha also offer us to invest into mutual fund and shares so there is not much difference or value with their website offering.
2)Agents -The key point they highlight is their distributor agents i.e sub-distributors, which they call partners provide face to face interaction to local people to clarify any questions with their investment. The reality is different. Not all NJ agents are good, most of them manipulate their customers in buying those mutual funds where they get maximum commission. It is similar to LIC agents used to do, they used to sell endowment, money back plans, ULIP that are not much useful . The mutual fund distribution is a big business in India where the commission on a particular mutual fund is from 0.5 to 4.5%. You can check commission against each mutual fund scheme on their website. They get commission when you invest and even every years till you keep investment with them.The distributor never inform how much commission they get from selling the mutual fund, but thanks to CAMS India that will provide the extra money you paid to your mutual fund distributor every 6 months - it is published in March and September. In short, this is not a secret anymore if you are aware of CAMS but most of the people are still not aware.
3) Commission on SIP business - The problem with NJ agents is that anyone an become agent by passing some exam that costs Rs 1500, even if you have not passed your school's board exams you can become a mutual fund agent . Do you think such person will be able to given proper service to you? Their motto is to sell max SIP, they have a target and their commission depends on them. They are basically sales person who try to convince you to invest with them. Once you invest and start SIP with them, they won't even bother to look at you. They will be searching for the next person who can do SIP, and most probably you will be the one who would have referred such person to them. Their SIP investment is for long term, they don't bother to check if it is benefiting you or there are better schemes to move on. When you have to invest they will run after you, they will come to your home with all paperwork. When you need them, they will tell you to come to their office or you will always find them busy. If you redeem mutual fund without informing your mutual fund agent, you may also get threat call from them, they will talk all nonsense and even abuse you for taking out money. The reason is their yearly commission will be reduced. Once they start making more commission money, they usually become rude. If you have a mutual fund portfolio of 10 lakh, then you will be paying Rs 10000 approx around 1% to your agent. Think about one person paying Rs 1000 every month to an agent and that agent has 100 clients like you. It is a big business but future is dark due to arrival of direct mutual fund schemes and more people getting aware of it. Nowadays no one buys ULIP or endowment plans from LIC agents.
4) Direct Mutual Funds - With the awareness of mutual funds on TV, internet, social media, newspaper people are getting to know that the investment in mutual fund is now 100 times simpler than 3-4 years ago. You can register on CAMS or KARVY or directly on mutual fund website to invest money in mutual fund for the first time. It is all ONLINE, no paperwork. The website asks you to provide PAN number and some ID proof and that is all online. Their apps are available on mobile and you can invest from your smartphone, it is that simple.
The distributors provide historical performance of mutual funds and that is all found on websites like moneycontrol, morningstart, amfi, mutualfunds india, valueresearch so there is no value addition of NJ agents. Being a distributor, they cannot give advice but this is a grey area which distributors exploit.
The biggest advantage of direct mutual fund investment is you SAVE COMMISSION that is paid to agents by mutual fund companies. You can save that with direct investment. NJ India does not provide investment into direct mutual fund schemes which is obvious, their goal is to earn commission. However, if you are ready to go thru historical performance of mutual funds on websites, see trends and have patience to invest for 3+ years then you will make more money by investing into direct mutual fund. The agents don't give any good advice, they work only for their commission. Even if your portfolio turns RED, they will say don't redeem and stay invested.
I used to invest in mutual funds via agents but not any longer. The agent also quarreled with me when I took out money but I think I made a right decision. I am saving a lot on commission and by investing in direct mutual fund, I will achieve my financial goals few years earlier. Happy investing.
