Direct vs Regular Mutual Funds: The ₹50 Lakh Commission

The "Free" Advice Trap

Every time you walk into a bank, the Relationship Manager (RM) tries to sell you a "Top Rated" Mutual Fund. They fill the forms, do the KYC, and set up the SIP for you.

They say: "Sir, there are no charges. It is free for you."

This is the biggest lie in Indian Finance.

Nothing is free. The RM gets paid a commission. But they don't take it from your bank account directly. They take it from your investment every single day.

Direct vs Regular: The 1% Difference

There are two versions of EVERY Mutual Fund scheme:

1. •Regular Plan: Sold by Distributors/Banks. Contains hidden commissions (approx 1-1.5%).
2. •Direct Plan: Sold directly by the AMC or platforms like Zerodha/Groww. ZERO commissions.

The portfolio is the same. The Fund Manager is the same. The stocks are the same. Only the NAV (Price) is different.

Because the Regular Plan pays a commission to the agent from your money, its NAV grows slower than the Direct Plan.

The Math: ₹50 Lakhs Loss

"It's just 1%," you say. "Let the agent earn."

Let's do the math.

• •SIP: ₹50,000 / month
• •Time: 20 Years
• •Direct Plan Return: 12%
• •Regular Plan Return: 11% (1% less due to commission)

Result:

• •Direct Plan Corpus: ₹4.99 Crores
• •Regular Plan Corpus: ₹4.28 Crores
• •LOSS: ₹71 Lakhs

You paid ₹71 Lakhs just for someone to fill a form 20 years ago.

How to Check?

Open your Mutual Fund statement. Does it say "Regular" or "Distributor" next to the scheme name? If yes, you are losing money every day.

It should say "Direct".

How to Fix It?

1. •Stop further SIPs in the Regular Plan immediately.
2. •Open a Direct Mutual Fund account (Zerodha Coin, Groww, Kuvera, MFUtility).
3. •Start the same SIP in the "Direct - Growth" version of the same fund.
4. •Transfer: Once the exit load period (usually 1 year) is over for your old units, redeem them and move the money to the Direct Plan. Note: This may attract capital gains tax, so plan it carefully.

Conclusion: In the world of finance, if you aren't paying for the product, you are the product. Go Direct.