I will answer with an illustration below. Every Mutual Fund Scheme (there are thousands) come in TWO plans – Direct and Regular. If you do NOT invest in “Direct Plans” then the bank (here they are the ‘distributor’) takes upto 1.5% commission yearly (they are paid monthly).
The may appear small but over a career you give away 40%-50% of your total investment (not just initial amount) as this compounds. Even if markets dip, this commission stream flows endlessly.
So when you invest through any bank, it may appear that there are “No Charges”, but in effect you are paying a huge amount through indirect commissions.
