How to Become a Mutual Fund Distributor?

May 11, 2023
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How to Become a Mutual Fund Distributor?

How to Become a Mutual Fund Distributor?

May 11, 2023

Registrationwala

A mutual fund distributor (MFD), a.k.a mutual fund agent, is a person or organization that helps investors acquire and sell mutual funds units. They assist investors in making sound investment decisions by choosing the right MF schemes for them. In return, they earn a decent commission for their hard work.

If you’re wondering how to become a mutual fund agent, you must check out this blog post wherein we explain all the requirements in a simple and easy manner.

Requirements to Become a Mutual Fund Agent

You cannot jump into the MF schemes distribution process right away. You must first become an AMFI-registered MFD. The requirements for becoming one are described in this section.:

Pass the NISM Examination

First and foremost, you must pass the NISM-Series-V-A: Mutual Fund Distributors Certification Examination. This assessment is conducted by the National Institute of Securities Market (NISM), established by the Securities and Exchange Board of India (SEBI) - the regulator of the securities markets in India.

The primary objective of the NISM mutual fund certification is to make certain that the MFD is familiar with the fundamentals of mutual funds. A passing certificate from the National Institute of Securities Market (NISM) for NISM-Series V-A has a three-year validity term.

Secure AMFI Registration Number

To designate each distributor as an AMFI Registered MF agent, a unique code called the AMFI Registration Number (ARN) gets issued. The AMFI Registration Number (ARN) is given once the NISM exam has been passed.

Candidates not only receive an ARN Number but also an Employee Unique Identity Number (EUIN). The entire ARN application process is done online.

Join Mutual Funds Distribution Platform

You must apply for empanelment with every mutual funds company after receiving the AMFI Registration Number (ARN). You can simultaneously register with the online MF distribution service Nivesh (form for empanelment) as well.

Nivesh offers the distributors a hassle-free option to expand their business in the proper orientation. The digital environment is also very easy to comprehend and manage. The agency may easily go digital with Nivesh without spending any money or incurring any additional costs in order to increase its clientele and improve its services.

Start Distribution of Mutual Funds

The success of a smart MFD lies in offering their clients the best MF programs. These are the key factors to take into account in order to offer the client the ideal mutual funds plan:

The client's investment purpose, or the intended use of the money.
The time frame for which the investor is ready to retain their money in the plan. From a few months to several years is doable.
Risk tolerance of the customer, whether they are low or moderate-risk takers.

Once you complete all the requirements, you can go ahead and distribute mutual funds’ schemes.

Benefits of Becoming a Mutual Fund Agent

The benefits of becoming a distributor of MF schemes are explained below:

As an MFD, you get to offer investors the flexibility to redeem their mutual funds’ units at any time. Unlike Fixed Deposits (FDs), MFs allow flexible withdrawals, making them an attractive investment option. However, it is essential to educate investors about factors like exit load and pre-exit penalties.
By becoming a MF distributor, you can help many investors reduce investment-related risks by adopting diversification. A well-diversified portfolio assists in the development of overall performance, ensures stability and minimizes investment risks.
Investors, especially those who are beginners, usually lack the knowledge and expertise to make informed investment decisions. As an MFD, you get to connect such individuals with professionally managed MF schemes where experts are responsible for allocation of funds across various securities. This helps in getting better returns and allows the investors to deal with hurdles.
MFs provide high flexibility. Because of this, they are accessible to a wide range of investors. As an MFD, you can guide investors in choosing investment plans that suit their financial situation, such as Systematic Investment Plans (SIPs), where fixed amounts can be invested on a monthly or quarterly basis based on the investor’s budget and income flow.
One of the primary advantages of becoming an MFD is the ease of access to MF schemes for clients. With your assistance, investors can start investing from anywhere in the world. This would make mutual funds a convenient and widely accessible investment choice for your clients.

Conclusion

One of the financial sector’s most rapidly expanding and fiercely competitive divisions is the mutual funds market in India. In comparison to prior years, the number of mutual funds available is likewise rising exponentially in India. The rapid growth of financial goods among investors is the primary driver of this expansion in Mutual Fund Distribution in India. Due to this, more people are putting their money into MF schemes, which are better suited to meet demand. Thus, you can consider becoming a MF agent and make good income in the form of commissions.

To become a Mutual Funds Distributor, connect with Registrationwala. We’ll help you get registered with AMFI.

Frequently Asked Questions (FAQs)

Q1. What is a Mutual Fund Distributor (MFD)?

A. An MFD is an individual or business that helps investors buy, sell, and manage mutual funds.

Q2. How much can I earn as a mutual fund distributor?

A. As an MFD, you can earn 1-2 percent commission on every mutual fund a client purchases through you. More clients are equivalent to more income.

Q3. What is the validity of NISM Certification?

A. NISM certification comes with a validity of 3 years.

Q4. Can I start as a MF distributor without prior experience?

A. Yes, you can start a MF distributor without prior experience. However, make sure you pass the NISM certification and get an MFD license from AMFI.

Q5. What is the eligibility criteria for becoming an MFD?

A. To be eligible for becoming an MFD, you must be at 18 years of age. Also, you should have passed the 10+2 examination from a recognized board or university. In addition to this, you must pass the mandatory NISM-Series V-A: Mutual Fund Distributors Certification Examination.

Also read: How to become SEBI registered investment advisor?