We do take commissions. Just that we don't recommend funds based on which fund house gives us the biggest commission.
We do what's best for the customer. This is also the reason why we decided to have curated list of funds rather than having all funds in our portfolio. We are losing money by not having all the funds in our product and not behaving like a pure transactional platform.
In a way, having limited set of funds also holds us more accountable to our customers.
2) As mentioned earlier, we sell regular plans which gives us commissions. However, I am not sure of the business model of some of the direct plan providers- especially the ones who charge one time fee for an investment. The cost is not just for executing a transaction. There is acquisition cost. Then there are huge support costs involved over the life time of the customer. What happens when a customer wants to change bank account or needs address change? What happens when they want KYC done? What about document pick up? These costs tend to add up over time.
Scripbox has been in business for 5+ years and we have seen how these costs can creep up.
Zerodha founder had the following to say about a direct plan providers business model.
"How will the business make money?
For Zerodha, selling MF is not the main business. After getting to 150 crores of AUM in 2.5 months selling direct MF (maybe the fastest any online platform has gotten this much AUM ever in India), I am not sure if there is a viable standalone business model to run this at Rs 50/month or say Rs 30/transaction or even upto Rs 2000/year that some other direct MF platforms are charging. I can run it because MF contributes to less than 0.5% of our business and there is no acquisition cost or running cost since this is extension to how we settle stocks in demat. If cost of acquisition is between Rs 500 to Rs 1000 (considering minimum advertising/salary and doing full KYC), and you take 1 to 2 years or more to just recover that cost. How will the business sustain? Is the plan to sell advisory at a higher fees like others, if yes how much?
Have been in this for 20 years, I can also tell you that when markets starts to trend down, people stop investing. Won't your transaction fees model put stress on your balance sheet then?"
I am not saying direct plan is not sustainable. It probably is. But it's very much early days.