In this blog, we will explain in detail How to Become a Mutual Fund Distributor in India. According to the IMF, India will become the third-largest economy by 2028.
Regarding investments, India will grow multifold in the next three years. The mutual fund has already increased by fivefold. This happened in the past ten years of investments.
This means that retail and domestic investors are very aware. They are consciously investing in the market.
Whether through mutual funds, directly in stocks, bonuses, or FDs, it is happening. In short, investment is being made in every instrument.
If you want to become a mutual fund distributor but are unsure how to get started, we are here to help.
From learning about the NISM certification exam to acquiring prospects, we will focus on everything in general. You can also take your business to the next level with our assistance.
The demand for mutual funds is growing. Investors want guidance from distributors to navigate the complex market.
Mutual fund distributors also help investors make thoughtful financial decisions. This further boosts the chances of higher returns.
This article is a thorough read for individuals who want to become mutual fund distributors. It provides in-depth information about the steps to becoming one, its benefits, and who can become an MFD.
Who is a Mutual Fund Agent?
MFD is a type of financial advisor who knows everything about mutual funds. He suggests suitable investment options based on risk appetite and terms to clients.
He also creates a portfolio that meets clients’ requirements and helps them invest. Furthermore, he looks into documentation, KYC, and bank documentation.
The mutual fund agent sells the companies’ mutual funds to the clients and makes a commission out of it.
Mutual fund agents need to know mutual fund options, but they cannot advise investors on their investments. This job is totally under Registered Investment Advisor.
They will likely understand the investors’ financial goals, risk appetite, and investment portfolio, which will help the fund agent suggest the best funds to the investors.
Eligibility Criteria for a Mutual Fund Distributor
The Mutual Fund Distributor business has been booming lately. This has encouraged many people to join extensive mutual fund networks.
It has also encouraged them to start careers in this field. Nevertheless, individuals must satisfy specific eligibility criteria to start as mutual fund agents.
Eligibility
- The individual must be at least 18 years old.
- You should have a minimum qualification of 10+2 from a recognized university or board.
- You must qualify for the NISM V-A exam and get the certification from the authority.
Key Proficiencies
- The mutual fund seller must have a basic understanding of mutual funds and how they work. They should be able to analyze the risks of different types of funds. Then, they should suggest fund options to clients accordingly.
- As a mutual fund distributor, you must understand every client’s goals. This will assist you in suggesting suitable funds to the clients.
- Good communication skills are a must for a mutual fund seller. You need to explain complex mutual funds to clients. They have no prior knowledge of them. It would be best if you also convinced them to invest.
- To maintain client retention, you should possess decent marketing skills. By offering top-notch services, you can maintain good client retention.
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Steps to Become a Mutual Fund Distributor
Becoming a mutual fund distributor or agent is not easy. There are multiple steps, each of which we have explained in detail.
Step 1
If you are eligible for the role, you can take the NISM V-A exam. The National Institute for Securities Markets (NISM) conducts the exam.
It is a certification exam for mutual fund distributors. Every aspiring distributor must take it. The exam is valid for three years.
Step 2
Once you pass the NISM certification exam, you get an AMFI registration number (ARN). Each distributor gets a unique code.
They use it to run their mutual fund business. An Employee Unique Identification Number (EUIN) will also be assigned to the individual.
Step 3
After acquiring the ARN number, you must register your company with the Registrar of Companies.
Step 4
After that, you should apply for a company PAN. Other than PAN, you should open a corporate bank account.
Step 5
To operate as a corporate company, you must set up a small office space and a team of two to three members.
Step 6
You are now a complete mutual fund distributor. To start the business, you can either approach a mutual fund distribution platform or partner with other mutual fund companies in the industry.
Either way, you can do your mutual fund distribution business and earn a commission.
Step 7
As you have empaneled with Asset Management Companies (AMCs), you can now sell your clients a wide range of mutual fund products.
Even if you choose to be a sub-distributor for a giant distributor in the industry, you can start selling their mutual fund products and earn a commission.
The mutual fund distribution landscape is entirely competitive, and knowing everything about the fund options available is essential to stay ahead of the game.
You must understand what your client wants from you and, of course, from the investments he will make.
By staying updated about the latest trends in the financial industry, you can suggest appropriate investment options to the clients.
To maintain a strong relationship with your clients, you should focus on offering them personalized services.
Documents Required to Become a Mutual Fund Agent
The documents required to become a Mutual Fund Distributor (MFD) are:
- NISM Certificate (NISM V-A)
- PAN Card
- KYC Documents like Aadhar, Passport, voter ID
- Two recent passport-size photographs
- Address proof
- Educational Documents
- Experience certificate, if any
- ARN Card.
What are the Benefits of Becoming a Mutual Fund Distributor?
A mutual fund agent can benefit from successfully becoming a distributor.
- Be your own boss as a mutual fund seller. You can set your working hours and do the business on your terms.
- You can earn potential money through commissions with a wide network of clients investing in mutual funds.
- If you learn quickly and like to learn new things often, you will enjoy this journey as a mutual fund distributor. It would be best if you constantly learned to stay on top.
- Your suggestions will help your clients achieve financial success, which is an achievement in itself.
How to Become a Mutual Fund Distributor? – Conclusion
If you are an aspiring mutual fund distributor, we are sure this article has given you complete insight into your possible benefits and challenges. You can start as a mutual fund distributor.
You can make it a rewarding career by working hard to achieve your client’s financial goals. Becoming a mutual fund distributor may seem complicated.
But you can do it if you try. You can accomplish great heights in this field with proper knowledge and thorough interest.