• 1. Pass the NISM Exam - The first step towards becoming a mutual fund distributor isto register and clear the NISM Series V-A Mutual Fund Distributors Certification Examination. The National Institute of Securities Markets - a public trust established by the Securities and Exchange Board of India (SEBI) in 2006 conducts the exam. NISM charges a small fee for registering for the examination. A candidate must score at least 50 percent marks to clear the exam. The test consists of 100 questions of one mark each. For NISM VA exam preparation, you can download a free NISM VA mock test.


• 2. Apply for an ARN Number - The second step is to apply for an ARN code or number that performs several functions for investors as well as mutual fund distributors. For instance, it safeguards investors by ensuring the credibility and traceability of mutual fund distributors in case of scams or fraud. Moreover, it also helps in recording investments done via a particular mutual fund distributor and calculating the total MDF commission earned through those investments. Every individual or entity that wishes to start its own mutual funds distribution business must apply for an ARN number with the AMFI. This application process includes submission of various documents, the Know Your Distributor process, and more. You can visit our dedicated page on ARN number to know more about these unique identification codes.


• 3. Register with a Distributor / AMC - Once you have completed the AMFI registration process and obtained your ARN number, you can start distributing mutual fund schemes to investors and earning a commission. All you have to do is partner with AMC Asset Management Companies or fund houses and sell mutual fund schemes. These AMCs or funds will pay a commission as per the agreement, based on the quantity of mutual fund schemes the distributor sells. In addition, the distributor can also partner with Zfunds and start selling mutual fund schemes of all AMCs.

For mutual fund distributors, there are no specific educational requirements mandated by regulatory bodies, while certain qualifications can greatly enhance their effectiveness and credibility in the field. Here are some qualifications that can benefit mutual fund distributors:

• Age: To become a mutual fund distributor, an individual must be at least 18 years old and have completed their education up to the 12th grade, or the 10th grade followed by a three-year diploma.


• Regulatory Certifications: In India, MF distributors are required to obtain certifications such as the NISM mutual fund distributor exam certification. This certification ensures that distributors possess a basic understanding of mutual funds, their functioning, and the regulatory framework surrounding them.


• Financial Industry Knowledge: A strong foundation in financial concepts and the investment industry is essential for a mutual fund distributor in India. They should comprehensively understand different types of mutual funds, asset classes, risk management, taxation rules, and investment strategies. Keeping up-to-date with market trends, economic indicators, and regulatory changes is crucial.

Becoming a mutual funds distributor requires a blend of skills to effectively market mutual funds and assist clients in making informed investment decisions. Here are the key skills needed:

• 1. Financial Acumen: A strong understanding of financial markets, mutual fund products, and investment strategies.


• 2. Regulatory Knowledge: Familiarity with financial regulations, compliance requirements, and industry standards. Passing the necessary certifications, such as NISM Series V-A (Mutual Fund Distributors Certification Examination), is essential.


• 3. Sales and Marketing Skills: Proficiency in sales techniques to attract and retain clients. This includes understanding client needs, pitching suitable products, and closing sales.


• 4. Communication Skills: Ability to explain complex financial concepts in a clear and understandable manner to clients. Strong verbal and written communication skills are crucial.


• 5. Customer Service Orientation: A focus on building and maintaining strong client relationships through personalized service, timely follow-ups, and addressing client queries and concerns effectively.


• 6. Analytical Skills: Ability to analyze market trends, assess mutual fund performance, and make data-driven recommendations to clients.


• 7. Negotiation Skills: Capable of negotiating terms with clients and fund houses to ensure mutually beneficial agreements.


• 8. Ethical Standards: High ethical standards to act in the best interests of clients, ensuring transparency and trust in all transactions.


• 9. Technology Proficiency: Familiarity with financial software, investment platforms, and digital tools for efficient transaction processing and client communication.


• 10. Networking Skills: Ability to build a network of clients, industry contacts, and relationships with fund houses to expand business opportunities.


• 11. Problem-Solving Skills: Capability to address client issues, resolve conflicts, and provide solutions that align with client goals.


• 12. Time Management: Efficiently managing time to balance client meetings, ongoing education, administrative tasks, and sales activities.

• Educating the Investor- It is the responsibility of a mutual fund distributor to educate his or her investor on mutual fund schemes, etc. He should keep his clients informed about market trends, economic changes, AMC changes, and how they will impact investments.


• Create a Risk Profile- Risk is inherent in mutual fund investments, and investors have varied levels of risk tolerance. It is the duty of the mutual fund distributor to analyze the risk tolerance of the investor and suggest funds that can fulfill their financial goal as well as meet their risk profile.


• Formulate an Investment Strategy- Every investor needs an investment strategy to safeguard the investment and derive the maximum returns. It is the responsibility of a mutual fund distributor to suggest an effective investment strategy that helps achieve the client’s short-term and long-term financial goals without taking too much risk.


• Help Investor Diversify - Diversification is one of the most critical requirements of any stock or mutual fund portfolio. However, it is often overlooked, especially by mutual fund investors. Therefore, MF distributors should emphasize the importance of diversification to their clients and suggest measures to incorporate this concept while building an MF portfolio.


• Documentation- Mutual fund distributors manage discrete financial transactions of their clients. These transactions can often be high in number. Mutual fund distributors must maintain clear records of clients’ transactions. These records are also mandatory for auditing purposes.

• 1. Flexibility in work: Mutual fund distribution offers the flexibility to work on one's schedule and from any location. This is especially beneficial for individuals who want to work from home or have other commitments.


• 2. Diversified product portfolio: As a mutual fund distributor, you have access to a wide range of products from different fund houses. This allows you to offer your clients a diversified portfolio and cater to their specific investment needs.


• 3. Helping people achieve their financial goals: By becoming a mutual fund distributor, you have the opportunity to help people achieve their financial goals. You can provide them with valuable advice and guidance on how to invest their money and help them make informed decisions.


• 4. Continuous learning: Mutual fund distribution requires continuous learning and staying up-to-date with the latest industry trends and regulations. This helps you to consistently improve your skills and knowledge, which can be beneficial in your personal and professional life.

• Zfunds is one of the fastest-growing mutual fund distributors in India, and by associating with us, you get a chance to become a partner in this growth.


• Earn the highest mutual fund commission payout upto ₹50,000.


• We have a team of investment experts who help our distributors maximize their clients returns. They consistently review distributors portfolios and suggest changes to eliminate unnecessary risks and grab investment opportunities.


• The platform provides full assistance, giving you the tools you need to succeed.


• You can sell all AMCs mutual funds by partnering with us.


• You can provide loans against mutual funds to earn more commission.


• ZFunds also provides you with online and offline marketing support to grow your clients.

The earnings of a mutual fund distributor can vary widely depending on factors such as location, experience, client base, the volume of assets under management (AUM), and the specific arrangements they have with their clients or the financial institutions they work with. Mutual fund distributors typically earn income through commissions or fees based on the investments they help their clients manage. Here are some points to consider:

1. Trail Commission: This is an ongoing payment made by the distributor as long as the investor keeps their investment with the fund. It is usually between 1% to 2% of the Assets Under Management (AUM) gathered annually by the distributor.


2. Additional Fees: In addition to the investment size, some financial advisors charge their customers consultation fees or management costs under certain circumstances, justifiable by a flat charge or percentage of the investment.


3. Volume-Based Incentives: Depending on how much business the distributor does, the mutual funds firm may also provide volume-based incentives to the distributor.


4. Renewal Commissions: If a client decides to re-invest or top up their existing investments, the distributor may be able to get renewal commissions from them.


5. Client Base: The number and size of clients that a distributor serves can impact their overall earnings. A larger and more diverse client base could lead to higher earnings.


6. Institutional vs. Independent Distributors: Some mutual fund distributors work independently, while others are associated with financial institutions. Compensation might vary based on these arrangements.

• Many investors still prefer traditional assets like FDs, gold, and real estate due to poor financial literacy and low trust in mutual funds, both in metropolitan and Tier 2 cities, as revealed by the 2007 IIMS Data.


• In the mutual fund industry, frequent SEBI rule changes will also affect distributor earnings also.


• Investor expect high returns on their investment without understanding market risks.


• Volatile markets trigger panic mode in investors, and they make impulsive withdrawals from their investments in the fear of losing their investments.


• A mutual fund is a complex investment option. SIPs, dividends, etc, can confuse new investors.

• Ethics- Mutual Fund distributors must maintain the highest moral standards, guaranteeing honesty and openness in their work. To properly manage investors' hard-earned money, it is important to fully prioritize their interests and maintain complete confidentiality.


• Promoting Financial Knowledge- Among 143.50 crore people in India as of September 2023, just slightly over 4 crores were individual investors in mutual funds. The low rate of financial literacy is a significant contributing element to this.


• Investor Relationship- The distribution of mutual funds is built on the foundation of investor relationship trust. Distributors must establish reliable connections and inspire confidence in their products to convince investors to part with their hard-earned cash. Long-term success depends on gaining this trust.


• Training and Knowledge - A Mutual Fund distributor needs to stay up-to-date with developments and trends in the market. They should always learn new things by attending seminars, training, and reading trade journals to become successful advisors.

With the rising popularity of mutual fund investments in India, MF distribution is undeniably an amazing business opportunity for anyone interested. Moreover, you need a minimum educational qualification to become an MF distributor.

The best mutual fund distributor

1. ZFunds Mutual Fund Distributor
2. Tata Mutual Fund Distributor


3. SBI Mutual Fund Distributor


4. HDFC Mutual Fund Distributor


5. Kotak Mutual Fund Distributor


6. Axis Mutual Fund Distributor


7. Canara Robeco Mutual Fund Distributor


8. Karvy Mutual Fund Distributor

Yes, one must clear the NISM certification exam and secure an ARN number before becoming a registered mutual fund distributor. You can enroll in Online NISM courses to prepare for the exam.

Becoming a mutual fund distributor can be a rewarding career choice.

1. Income Potential: Mutual fund distributors have the potential to earn commissions based on assets under management (AUM).


2. Flexibility: The profession offers flexible work hours, enabling a balanced work-life schedule.


3. Client Relationships: Building strong client relationships and helping them achieve financial goals can be fulfilling.


4. Learning Opportunities: The dynamic financial industry provides continuous learning prospects.


5. Entrepreneurial Aspect: Distributors can establish their client base and business.


6. Contribution to Financial Literacy: Educating clients about investments and financial planning is impactful.


7. Regulatory Awareness: Adhering to regulations ensures ethical and transparent practices.


8. Market Influence: Earnings can be influenced by market fluctuations.


9. Client Acquisition: Gaining and retaining clients requires effective networking and reputation-building.

MFDs sell mutual fund to the investor; RIAs offer integrated solutions to manage an individual’s finances.

The roles of a mutual fund distributor and a broker in the financial industry have distinct focuses and responsibilities. Here's a concise comparison of the differences between the two:

Mutual Fund Distributor:

• Sells and distributes mutual fund products.
• Guides clients to choose suitable mutual funds.
• Earns commissions based on managed assets.
• Builds client relationships and offers ongoing advice.
• Focuses on mutual fund investments.

Broker:

• Facilitates the buying and selling of financial products.
• Executes trades across various financial instruments.
• Earns commissions for executing trades.
• Executes client transactions efficiently.
• Focuses on trade execution in diverse markets.

Yes, it can be profitable. Earnings depend on factors like your client base, sales skills, and the performance of the mutual funds you distribute. Successful distributors have earned significant commissions of Rs. 50,000/month from ZFunds.

Yes, a private employee can become a mutual fund distributor, but they should meet the eligibility requirements and have the necessary certification to become a mutual fund distributor.