I just heard this story of a 40-year-old woman mis-sold by a bank. She visited her bank branch and asked to invest in mutual funds, but the manager kept pushing her to invest in an insurance product. She went back and did her homework, and this time she insisted on index mutual funds, but the manager was rude and said she couldn’t invest in them through the bank.

After much back and forth, the manager got her to invest in a regular plan of index funds. Though the commissions are not as high as an insurance product, the bank still earns a trail commission for a lifetime, even though they never wanted her to buy it.

Even as direct mutual fund platforms like Coin have become popular, unwitting investors are still pushed to invest in high-commission insurance products. For example, the commissions on some insurance products can be 50%+ of the first-year premium and then fall to 2%+. The post-commission returns for the investors will be worse than a government bond or fixed deposit. Insurance should ideally be used only for insurance (health and term).

By the way, we started Coin in 2017 after SEBI enabled brokers to sell direct MF through the exchange. Today, the AUM is Rs 60,000 crs+ and has helped investors save hundreds of crores in commissions. This is more than 40% of the total AUM of all the fintech direct MF platforms and ~15% of the total retail direct AUM.

The Indian MF industry hit an AUM of 50 lakh crores recently, of which roughly Rs 12–13 lakh crores is from retail investors, and Rs 3–4 lakh crores of this is retail direct AUM.

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