I had just joined a Mutual fund as its Managing Director…after the celebrations were over, I had to make a business presentation to the Board about how we would go from being the 47th fund house to the 5th position in a matter of 5 years. That was not going to be difficult.

I was a little tired….and was trying to catch sleep when suddenly a call came from the regulator’s office calling for a meeting.

I cursed myself and went to the meeting…and there was a suggestion…which was to become law in about 12 months. Here is how it went…

R: Mr. Subra congrats on the new job.

Me: Thank you Ma’am.

R: You were not really looking for a job…how come you landed one…?

Me: Oh a classmate wanted to launch an AIF and PMS so he had to form a MF and he wanted me to be managing it.

R: Subra there is one change that we are planning to do…

Me: Yes sir, tell me. I always believed in transparency and clarity so anything that you say is fine…

R: Yes, yes I saw your video – when you told IFA (remember CIFA, 2016) (see here https://cafemutual.com/news/events/199-whats-the-future-of-advisory-business) and we thought you were so clear, we thought we should start talking to you about this new regulation.

Me: Yes Maam, I agree

R: so from now every mutual fund will collect 2 cheques (or mandates) from each client. One will be for investments and one will be for fees. For e.g. You have a large cap fund “Subra Large cap fund” and “Subra assets management company”. So Rs. 1 crore cheque will be for the fund (go into the trust account) and one will be in the name of the amc. So the amc will get a mandate of Rs. 2L -which is the fee that you collect for managing the money. We have also decided that you can collect the fees only quarterly in advance. So you will collect Rs. 50K for the first quarter. In the second quarter you will have to go to the client and ask for another cheque. Suppose you have managed badly and the fund value has come down to Rs. 92L in one quarter you will have to write to the client “sir we are the managers of your fund…and we have brought the value down to Rs 92 L and you have to pay us Rs. 50,000 for the next quarter (remember the fees was fixed in advance so it does not change q on q…it will be fixed at the BEGINNING of the year.

Me: That’s tough!! Indian clients don’t pay!!

R: see your video Subra…when you were on the otherside you were giving gyaan to the IFA that people going direct is fine…so why are you squealing now?

Me: I am not squealing, but why can’t we collect fees by extinguishing units – the way the ULIPs collect?

R: arre Subra you are saying that it is all right for IFA to collect fees from clients…we were thinking how would it be if amc were also given the same dose.

Me: I am all for transparency but the Indian guy will not pay. I mean we will have to justify our 2% (which is very very low) every quarter to a few thousand investors every quarter. We do not have the infra to do it.

R: but I thought you recruited brilliant IIT and IIM graduates who teach the world…why are you panicking as if you are from IIPM? you are well educated are you not?

Me (in a choking voice): Sir i am an investor in this amc..my friend has put in part of the money, but I am supposed to run it.

R: But Subra if an IFA can collect fees from the client why can’t you over educated, over dressed, over perfumed rich people do it? come on…it is not so difficult is it….

Suddenly the alarm rang…and I got up in cold sweat…I was sleeping in a nice cozy 5 star bed..I had gone for the board meeting which we were having in Maldives…

Omg it was just a dream…thank God I was still just a blogger…not the MD of a mutual fund..phew…