Everything you need to know about Mutual Fund Distributors
Mutual Fund Distributors offer their experience in this field to offer a solution of mutual fund options similar to the financial objectives of the trustee. So do you want to become a Mutual Fund Distributor in India? If yes, then there are certain things that you need to know. This blog post will discuss how to become a mutual fund distributor, the commission structure, and how to apply.
So keep reading to learn everything you need to know about becoming a potential Mutual Fund Distributor in India.
Becoming a mutual fund distributor or agent can be a great part-time source of revenue for most people in India. With more than 40 Asset Management Companies with more than 11500 schemes and assets Under Management (AUM) of around Rs 31 Lakh Crore, a group of only 15000+ active distributors will not suffice.
So here is a simple guide on how to become a Mutual Fund Distributor in India:
What is a Mutual Fund Distributor?
A mutual fund distributor is an entity that sells and promotes mutual funds to investors. In India, there are three types of distributors: individual agents, banks and financial institutions.
Individual agents are the most common type of distributor and work on a commission basis. They are generally associated with a particular AMC (Asset Management Company) or MF house.
Banks and financial institutions also sell mutual funds but generally do so through a relationship with an AMC.
Who are Mutual Fund Distributors?
Mutual Fund Distributors play a vital role in the world of investment, be it stock market, open market investing, or mutual funds. Mutual fund distributors are nothing but middlemen who play an important role in promoting the sale of mutual funds. These intermediaries are regulated and registered under the Securities Exchange Board of India (SEBI) and the Association of Mutual Funds (AMFI).
AMFI recommends that a Mutual Fund Distributor should be a person of high ethics and integrity.
A mutual fund distributor helps investors make viable decisions to invest in the right mutual fund schemes that fit their needs based on their needs.
One may wonder in what form these mutual fund distributors generate revenue. Well, these distributors earn a handsome commission in return for helping investors make transactions. These distributors are also called mutual fund agents. The substantial job of these agents is to track the performance of the mutual fund industries. They need to conduct qualitative as well as quantitative analysis using a comprehensive database and monitor these funds regularly.
A major part of his job is also to keep track of essential things related to the industry, the Indian market, and its economy, so that he is well-informed before guiding any investor.
Qualification for Mutual Fund Distributors in India
If you want to become a mutual fund distributor in India, you must have a graduation degree from a recognized university and must have cleared the mutual fund distributor exam of SEBI (Securities and Exchange Board of India).
How to become a Mutual Fund Distributor in India?
This is a comprehensive guide on How to become a Mutual Fund Distributor or Agent in India.
Step 1: Pass the NISM Series V-A:
Mutual Fund Distributor Certification Exam (Mutual Fund Agent Exam)
While there is no fixed minimum eligibility criteria to become an MF distributor, any person who can qualify for the mutual fund distributor exam of NISM is eligible to become an agent/distributor. The exam however requires a significant amount of study and preparation.
According to the website of NISM, only 60% of the candidates pass this exam, so taking the exam casually can be very dangerous. However, the good news is that there are free nism mock tests provided by ZFunds so that you can practice exams which will increase your chances of passing are high.
NISM exempts people above 50 years of age (as of June 01, 2010) from taking the exam by attending a one-day training program called NISM Continuing Professional Education (CPE), formerly known as AMFI Refresher Course.
The registration and enrolment process for both the exam and CPE is completely online at NiSM Certifications.
The NISM VA Mutual Fund Distributors Certification exam fee is Rs. 1500/- and NISM Mutual Fund CPE is Rs.2500/- and the certificate is generally received within 10 days.
This was the first step in becoming a Mutual Fund Distributor in India. Let’s go to the next step.
Step 2: Register with AMFI through the CAMS office
Once you pass the NISM Series V-A: Mutual Fund Distributors Certification exam, you are now eligible to become a distributor.
Now you need to go through the Know Your Distributor (KYD) process along with the AMFI Registration Number (ARN) application form.
It is a short application form that requires your details like name, address, photograph, qualification, NISM Mutual Fund Distributor exam details, bank details, and payment details.
For individuals, the fee is Rs.3000/- plus applicable GST and is to be made in the form of a Demand Draft.
Duly filled forms have to be submitted at any CAMS office. If you are not KYD compliant, you will need to be physically present at the CAMS office to submit your form along with your biometrics (fingerprints). Once the process is done, you will receive your ARN card at your registered address within a few days.
Step 3: Register with AMC
Now that you have an AMFI Registration Number (ARN Number), you are free to distribute mutual funds and earn commission.
However, there is one more small but tedious process to go through before you can start working. You will need to register with each mutual fund house/asset management company so that you can receive commission, application forms, marketing material, etc.
There are more than 40 mutual fund houses and you can choose from the top 5–6 fund houses like HDFC Mutual Fund, Reliance Mutual Fund, ICICI Prudential Mutual Fund, Birla Sun Life Mutual Fund, Axis Mutual Fund, SBI Mutual Fund, BNP Paribas Mutual Fund, etc. Alternatively, you can avoid the hassle of registering with each mutual fund individually and get registered with national distributors like ZFunds, etc. This will save you the hassle of registering for each mutual fund, but you will lose a share of your commission (around 20% to 40%) to these distributors.
So, overall, these 3 steps will make you a Mutual Fund Distributor and open up a new chain of income for you and your family. Under normal circumstances, the entire process including the time to prepare for the exam should not take more than a month and a half. So best of luck.
Mutual Fund Distributor Commission
To be successful in this business, you have to build a strong network of clients and maintain good relations with them. It would help you if you were proactive in keeping up with industry updates and developments to provide timely and accurate information to your customers.
The mutual fund commission you earn as a Mutual Fund advisor will depend on the type of product sold and the amount invested by the customer. Usually, a percentage of the total investment made by the customer is paid as a commission to the distributor.
For example, if a client invests Rs 1 lakh in a mutual fund scheme through you, your commission will be around Rs 3,000–5,000.
