Distributors


Distributors sell investment products to people, often the retail investor, independent of AMCs but drawing a fee from them. 

The AMCs pay the distributors for their financial products we buy from the latter, in the form of a commission that is the percentage of the invested amount. For recurring transactions such as a Sip with a distributor, the distributor gets a trailing commission on the invested amount, again as a percentage of the amount invested. 

Due to inefficiencies in the industry, distributors often display their biases despite being a third-party player. They push products and AMCs which give them more commissions rather than what is best suited for the investor.