How To Become A Mutual Fund Advisor

by admin | May 6, 2024

A mutual fund advisor’s primary task is to assist people in achieving their financial objectives and increasing or protecting their wealth through mutual fund investments. After evaluating investors’ investment horizons, risk tolerance, and financial objectives, MF advisors provide them with individualized financial advice. A mutual fund advisor may receive commissions directly from fund companies or via distributors who offer the companies’ mutual fund plans for sale.

What is a Mutual Fund Advisor?

A mutual fund advisor is a qualified person or company that offers investors financial advice regarding mutual funds to its clients. They are qualified professionals with knowledge of several mutual fund plans. 

When creating a list of mutual funds, these experts consider a number of factors. Investors can create a portfolio by selecting items from this list. These consist of a person’s financial goals, risk tolerance, and investment horizon.

A mutual fund advisor has the ability to assist investors in creating a portfolio of mutual funds that aligns with their financial goals. This means that the advisor has to keep track of multiple mutual fund schemes with different investment objectives. Important developments in the financial markets that may also have an impact should be known.

Eligibility Criteria For A Mutual Fund Advisor

• Education: The applicant should have a minim qualification of Class 12, or otherwise, a three-year diploma after Class 10.
• Age: Candidate’s age must be at least 18 years and there is no cap on the maximum age.
• Beneficial Education: Having experience in investment research, financial markets, or economics increases one’s chances of success in the mutual fund business.

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How to become a mutual fund advisor in India?

If you want to become a mutual fund advisor in India, you need to have proper knowledge about various steps involved in becoming one. 

Step 1: Appear for the NISM Exam

The candidate needs to register for the NISM Series V-A Mutual Fund Distributors Certification Examination by going to the official website of the National Institute of Securities Markets (NISM). The test is available at NISM locations. The registration fee is ₹1,500 (GST not included).

After making the payment, the candidate can download the PDF file to help them prepare for the exam. If their registration is approved, they can also purchase hard copies of the study materials from local book stores or online merchants. Professionals who have sold or distributed mutual funds for more than ten years may apply for a NISM Mutual Fund Distribution Certification via any of the following channels:

• Take the Mutual Fund Distributors Certification Examination, NISM Series V-A.
• Complete the NISM’s CPE (Continuing Professional Education) Training Program.

The six-hour classroom instruction module that comprises the CPE training program is followed by a test. There is a ₹2,500 registration fee for the program. Through the NISM website, applicants can electronically submit their applications.

Step 2: Clear the NISM Mutual Fund Distributor Exam

Candidates then need to clear the exam. The test results are shown on the screen as soon as it ends. The certificates are available to candidates on the NISM website in digital format. A hard copy will also be delivered in 30 business days to the address they supply. The certificate is valid for three years after passing the Series-V exam. The CPE program is valid for three years.

Step 3: Know Your Distributor

The candidate has to go through the Know Your Distributor (KYD) process after passing the exam.  On September 1, 2010, the Association of Mutual Funds in India (AMFI) embraced the KYD process. Examining and strengthening the existing mutual fund financial advisor registration process was the goal of this endeavor. This process would also help ensure the accuracy of the data submitted in the registration application and allow an in-person verification of ARN holders.

This procedure is followed when someone applies for an AMFI Registration Number (ARN) from the Association of Mutual Funds in India (AMFI). To begin providing advisory services for mutual fund schemes, this is a necessary step. Candidates must include their PAN, NISM Distribution certificate number, personal information, and other facts on the ARN application form.

The KYD process consists of document verification and a biometric procedure. As a result, the financial advisor needs to simultaneously file an application for KYD and ARN registration. Through its “CAMS POS” facilities, AMFI employs Computer Age Management Services Ltd. (CAMS) to manage the KYD procedure.

All correctly filled dcuments must be submitted through CAMS-KRA (KYC Registration Agency) in accordance with the specifications, either online or in person at a CAMS office. Upon satisfactory confirmation of the papers, the candidate—who is currently a mutual fund agent—is subsequently assigned an ARN number. After that, their card is delivered within a few days to the address they provided on their application.

Step 4: Sign up With Mutual Fund Distributors

When a mutual fund agent secures their ARN number, they become a fully qualified advisor. They are now able to provide clients with mutual fund advice services. The next step is to enter into an agreement to sell these funds with AMFI distributors. A commission is due from distributors, and it is determined by the number of mutual fund schemes the advisor offers.

Additionally, the advisor may choose to engage directly in contracts with asset management companies, or fund houses. Financial institutions such as Share India provide a suitable platform for individuals to work as advisors for mutual funds. Its attractive commission structures are quite helpful to those who want to become MF advisors.

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Conclusion

Mutual fund advisors perform a variety of tasks to suggest the best mutual funds to investors. They manage their clients’ portfolios, keep a careful eye on many funds, and assess their clients’ financial objectives. Choosing a job as an investment advisor for mutual funds is a worthy endeavor. The NISM exam must be passed in order to work as a mutual fund advisor. After that, he can begin providing his services by teaming up with a distributor or AMC.

FAQs on Become A Mutual Fund Advisor

Check out different FAQs regarding to Become A Mutual Fund Advisor here.

Q.1. What certifications need to be possessed to become a mutual fund advisor?

Ans:- Clearing the Mutual Fund Distributor Certification Exam (NISM Series V-A), administered by NISM-approved testing centers, is a prerequisite for becoming a mutual fund advisor in India.

Q.2. Can I work as an independent mutual fund advisor?

Ans:- You have the option of using a brokerage house or working independently. Depending on your business strategy and personal tastes, it’s up to you to decide.

Q.3. Can a mutual fund advisory provide investment suggestions on other financial instruments like fixed deposits or insurance?

Ans:- Advisors might need to obtain extra qualifications and register in order to offer advice on other financial instruments such as stocks, bonds, insurance, and mutual funds, depending on SEBI regulations.

Q.4. Do mutual fund advisors earn commission?

Ans:- A majority of mutual fund advisors associate with mutual fund companies and get a monthly salary against their services. 

Q.5. How much commission do mutual fund advisors usually get?

Ans:- In most cases, mutual fund advisors get a commission of nearly 0.25% to 5% on every mutual fund investment they bring. 

Q.6. How are mutual fund commissions calculated?

Ans:- Generally expressed as a percentage of the investor’s investment, the commission might vary from 0.5% to 1.5% based on the distributor and the mutual fund type.

Q.7. Which mutual fund offers the highest commission to mutual fund advisors?

Ans:- The State Bank of India (SBI) supports SBI Mutual Fund, the largest fund company in India. In FY23, the fund firm paid commission of Rs 1,675 crore.

Q.8. What does NAV mean?

Ans:- The market value of a mutual fund per unit or share is represented by its net asset value, or NAV. The Net Asset Value refers to the price at which an investor can purchase or sell units of mutual funds from the fund house or AMC is known as net asset value.