A good Mutual Fund Distributor would convey the meaning of all the jargon used in Mutual Funds talk. In easy and layman’s terms to you. So that you are able to evaluate. The terms may be Scheme Objectives, Investment Portfolio, Risk Involved, NAV, Annualized Returns, or AUM, etc. To understand all this, we need to put in time and efforts. These 2 commodities that are always a shortage of. That is why we need a Mutual Fund Distributor or a Mutual Funds Agent.
Though you know your financial situation best. Still, a good distributor would know of the right questions to ask you and put things in perspective.
A Mutual Fund Distributor is qualified and trained to connect with the investors. Recognize their needs. Select the Best Mutual Fund having features best suited to match those needs. And recommend. According to your needs, he will also be able to suggest ways to invest. How much diversification is required and recommended and best plans to invest in?
Once the portfolio has been selected and invested in. Regular monitoring of the Mutual Funds Investment schemes and portfolio are required. It is an on-going job. A Mutual Fund Distributor helps you review these schemes too.
Rules Laid Down
To become a Mutual Fund Distributor, you would have to get registered with the AMFI (Association of Mutual Funds in India). After passing the NISM Certification Test. After registration, you would be issued a Unique Code – ARN Code (AMFI Registration Number). SEBI has made this registration mandatory. In order to ensure that the best ethical standards are practiced.
The conditions are slightly different for Individuals or business entities wishing to get enrolled with AMFI. Distributor.
- Minimum Ages should be 18-years.
- ARN is allotted to:
- Mutual Funds Distributor or Brokers, who have passed NISM Certification Test. Senior Citizens who have attended CPE (Continuing Professional Education). And applying for the ARN code. They will receive a Photo ID Card. It consists of ARN code, name, photo and the validity of ARN Code.
- Corporates engaged in selling Mutual Funds. And applying for the ARN. The Companies receive a Letter of Registration. It will have the ARN Code and its validity, name of the company, etc.
- The Intermediaries, whether Individuals or Corporates, would have employees. Those employees that are engaged in sales of Mutual Funds would be issued EUIN code, with name, photo, and validity.
- This ARN code identifies the intermediary as ARMFA.
- The validity of the ARN code is 3-years. This is applicable to individuals, as well as corporate entities.
- No Mutual Fund Distributor can hold more than one ARN ID or Letter of Registration.
- After receiving the ARN code, the intermediaries have to approach the AMCs (Asset Management Companies). Ask them for empanelment. And only afterward would they be able to start selling Mutual Funds.
Duties of Mutual Fund Distributor
You must have come face-to-face with Mutual Fund Distributors or Mutual Funds Advisor.at various stages in life. You must have been recommended Best Mutual Funds across AMCs.
But because you would be investing your hard-earned money. You must be aware of your requirements and risk appetite. You cannot put your money in any Fund blindly. And most of do not have the expertise to understand the Mutual Funds and markets involved. This is where a Mutual Fund Distributor can help you.
Their duties and responsibilities include:
Listen & Educate:
The first step a Mutual Funds Agent or Distributor will take is to hear you out. This is how he (or she) will be able to chalk out the path of investment. Types of Mutual Funds. Benefits of various Mutual Funds. You will also be made aware of the various terms being used in Mutual Funds. NAV, Annualized Returns, etc. How they are calculated? What is the past performance of various Funds? Which points you should look for while selecting any Mutual Fund. Whether and how you can diversify your investments? And so on.
By listening to you, he will be able to recognize your financial conditions and future requirement. He will be able to ascertain your risk appetite. That way, he would suggest the best investment strategy. For example, if you are young, at the start of your carrier. With not many responsibilities, he may suggest Equity Mutual Funds. Carrying more risk that Debt or Liquid Funds. He will consider age, expenses, financial status, and responsibilities. And evaluate in terms of investment duration etc. Lastly, devise the best strategy for you.
Once your understanding is complete, the distributor will analyze the market conditions. Now, he will recommend the way to invest. Whether you should go for SIP or Lump Sum Investment. Or even STP with your Lump Sum. They also have to keep themselves updated about the latest news affecting the market. This ensures that their recommendations are not outdated.
Chalk out the Plan:
After weighing the possible investment options, the Mutual Funds Agents or Distributor strategizes the suitable route for investment. This is achieved by mixing a variety of investment options. And diversify the portfolio to minimize risks and maximize returns. Advising them during the journey is also part of the job. When you should switch, redeem depending on the performance of Mutual Funds is advised to you periodically.
Preserving the very discreet details about the customer. Whether personal or financial. It is a gigantic task. Since the Distributors has been entrusted with this personal and financial information. They are also been made responsible to maintain secrecy. Therefore, it is mandatory that they keep their services well-documented. Invoices, details of offers and any other transactions. This record is also very important at the time of audit of the firm.
Become the Best Mutual Fund Distributor
Every financial year, around 8,000 + mutual fund distributors get registered. Most of the investors have already been approached. All the investors are taking help and advice of at least one, if not more. So how do you make your Mutual Fund Distribution Agency stand out? What should be the selling strategy to adopt for you? How do you attract those investors who are already investing with someone else? What should you do that others are not doing?
The educational qualification, the work experience, and knowledge are important deciding factors. You and your team must possess a vast knowledge of different asset classes. Whether it is Equity, Fixed income or Gold. You and your team must be able to interpret the events at various levels. National or International. And how the market will get affected by them.
The ability of a good assessment of products that will meet the requirements of your investors. As and when they need, comes very handy.
It is important that you remain accessible to those who have invested with you. In you. You should be able to answer the queries within a reasonable time and must be accessible. Using whatever means of communication you choose. It could be telephonic, email and/or meetings. Time is of the essence of the financial world. So you must execute the investments quickly.
Services under one Roof:
Most investors consider money matters confidential thing. So they do not want to discuss their finances and investments with too many people. And that too again and again. They prefer an advisor who can handle their investments and other information with secrecy. They would prefer an unbiased advisor. One who can offer mutual fund products from all fund houses.
Most investors prefer Mutual Funds Agents or Distributors who have had successful innings. They want to know the past track record of the person they are entrusting their money with. They want to know the field of experience. What knowledge does the advisor have? Though there is no formal rating or ranking system for mutual fund distributors in India. So an informal and word-of-mouth marketing comes handy.
Besides, you can ask around for referrals. Moreover, you can use social media websites, to advertise, and get recommended. Keeping in touch with your existing and satisfied clients over social media will attract investors on the friend list.
A good advisor needs to be compensated well. Either you use a Distribution Model, where you will get a commission from the Fund House. Alternatively, you may charge a fee for the service, depending on the time you spend personalizing the portfolio. Each one of your customers would want to know your commission structure. You must try to be honest with them, as much as possible. Without revealing much.
If you are new to Mutual Funds Distribution and finding the journey overwhelming. Get registered with WealthBucket. Increase your base. Get individualized training. Get introduced to and deal in products from a variety of AMCs and Fund Houses.
Call NOW +91 8750005655. Or email for more details at [email protected]