This is the question we get asked most often, usually phrased as an accusation: "you're commission-based, so you'll push products." It is a fair question, and it deserves a fair answer rather than a defence of our own business model.
So here is the honest version — including the cases where a fee-only adviser is the better choice.
The two models, and where the money comes from
Both are regulated. They simply bill you through different pipes.
Mutual fund distributor (MFD)
Registered with AMFI, holding an ARN. The distributor recommends and services mutual fund schemes, and is paid by the asset management company — not by you — through a trail commission embedded in the regular plan's total expense ratio. For equity funds that is typically 0.20%–1.00% a year; for debt funds, 0.10%–1.00%. You never receive an invoice.
SEBI-registered investment adviser (RIA)
Registered with SEBI under the Investment Advisers Regulations, 2013. An RIA gives advice only and is barred from receiving product commissions, which is the point of the licence. The client pays the fee directly. SEBI caps it at 2.5% of assets under advice per year, or ₹1,51,000 per family per year in fixed-fee mode.
As of 25 October 2026 there were 1,062 SEBI-registered investment advisers in India, according to SEBI's own registry. That is a small number for a country with 27.39 crore mutual fund folios, which is why most households are served by distributors.
What you actually pay, side by side
The comparison only becomes meaningful when you put a rupee number on it. Assume the same scheme, with a direct-plan TER of about 0.55% and a regular-plan TER of about 1.45% — a 0.90% gap, which is typical for actively managed equity funds.
| Regular plan via MFD | Direct plan + SEBI RIA | |
|---|---|---|
| Expense ratio gap | ~0.90% embedded | 0% (you keep the saving) |
| Advice cost | Included in the TER | ₹15,000–₹50,000 a year, typically |
| On a ₹50 lakh portfolio | ~₹45,000 a year | ₹15,000–₹50,000 a year |
| On a ₹2 crore portfolio | ~₹1.8 lakh a year | ₹50,000–₹2 lakh a year |
| If the corpus falls 30% | Commission falls proportionally | Fee unchanged per the agreement |
| If you stop investing | Commission stops on redeemed units | Fee continues per the agreement |
Read that table carefully, because it dismantles the most common assumption in this debate. The direct plan does not become free when you add an adviser. You pay the direct expense ratio and the RIA fee. On a ₹50 lakh portfolio, direct-plus-RIA is often in the same range as, or more expensive than, the regular plan's embedded cost.
The saving from a direct plan is real — roughly 0.9% a year — but it is a saving you only keep if you take zero advice. The moment you hire an RIA, you have converted that saving into somebody's fee.
The question nobody asks: what happens to the adviser's income when you do badly?
Here is the part of the debate that almost never gets discussed, because it is uncomfortable for the fee-only side.
A distributor's income is a percentage of your corpus. If your ₹50 lakh becomes ₹35 lakh in a bear market, the commission falls with it. If you redeem and leave, the commission stops entirely. If you stay for fifteen years and the corpus compounds to ₹2 crore, the commission rises — but so does your wealth. The distributor earns more only by keeping you invested and by having your money grow. Those are the same two things you want.
An adviser's fee is fixed by agreement. It is billed monthly, quarterly or annually, whether the portfolio is up 25% or down 25%, whether you followed the advice or ignored it, and whether the plan was any good. SEBI's cap limits how much can be charged — 2.5% of assets under advice, or ₹1,51,000 per family per year — but it does not link the fee to the outcome. A fee is a fee.
That is not an accusation of bad faith. SEBI's RIA framework imposes a genuine fiduciary duty, and many fee-only advisers are excellent and deliver real value. It is simply a statement about incentive geometry: one revenue line moves with your corpus, the other does not. When you are choosing an adviser for the next twenty years, geometry matters more than intentions.
What the behaviour data says about advice
The cost argument assumes the advice is actually implemented. The evidence says the presence of an adviser changes behaviour in a measurable way.
- 23% of regular-plan SIP investors held their investments for more than five years, against only 12.4% of direct-plan investors (AMFI–CRISIL Factbook).
- By March 2026, 34.4% of regular-plan AUM was over five years old, versus 19.9% in direct plans.
- Morningstar's 2026 "Mind the Gap" study puts the investor return gap at roughly 1.2 percentage points a year — the cost of poorly timed buying and selling.
- DALBAR's 2026 study shows how violent this can be: the US equity investor gap was 848 basis points in 2024 and 72 basis points in 2025. One bad year dwarfs a decade of expense-ratio savings.
In the compounding formula, corpus = P × (1 + r)n. The fee moves r by roughly one percentage point. Behaviour moves n — and losing two years of n to a panic exit costs far more than the 0.9%.
What a distributor actually does for the commission
If the commission were purely for placing an order, it would be indefensible. It is not. At Manas Money the ongoing work is:
- Fund selection against a goal's horizon and drawdown tolerance, not against last year's ranking.
- Portfolio review — finding the overlap that turns a 14-fund portfolio into an expensive index fund.
- Goal tracking and course correction after a job change, a bonus, a child, or a property purchase.
- Asset allocation and periodic rebalancing, using fresh money where possible so no tax is triggered.
- The phone call in a correction that stops you from selling at the bottom. Unpaid, unglamorous, and the highest-value thing we do.
Our portfolio review and SIP advisory pages describe the cadence in detail.
Where a fee-only RIA genuinely wins
We would be lying if we said the commission model is always better. There are clear cases where a fee-only adviser is the right choice:
- You need advice beyond products. Estate planning, succession, trust structures, and complex cross-border situations are not mutual fund decisions. A fee-only planner is paid to think about the whole balance sheet, including real estate and business interests.
- You want no commission anywhere in your portfolio. Some investors have a principled preference for paying directly. That is a legitimate preference, not an irrational one.
- You will actually implement the plan. A fee-only plan only pays for itself if you execute it. If the plan becomes a PDF in a folder, you have paid for advice and received nothing.
- Your portfolio is mostly outside mutual funds. If the bulk of your wealth is direct equity, property and offshore assets, a distribution-based model has little to charge against.
Five questions to ask any adviser, including us
- What is your registration number, and what exactly does it permit you to do?
- How do you get paid — commission, fee, or both?
- What happens to your income if my portfolio falls 30% next year?
- What happens to your income if I stop investing new money but keep the existing corpus?
- Will you show me the all-in annual rupee cost of my portfolio, in one number?
If the answers are vague, the model does not matter. If the answers are precise, you can choose the model that fits you.
The short version
A ₹50 lakh portfolio costs roughly ₹45,000 a year under a regular plan, and roughly ₹15,000–₹50,000 a year under direct-plus-RIA. The prices are comparable. The incentives are not: one rises with your corpus, the other is fixed by agreement.
If you want the distribution model explained in local terms, read the mutual fund distributor in Thane guide. If you want the expense-ratio arithmetic in full, read direct vs regular mutual funds. And if you want a straight answer about your own portfolio, book a free consultation.