How to Become a Mutual Fund Agent
Mutual funds provide good prospects for long-term employment. A mutual fund representative has different functions and duties to carry out. The individuals with reasonable capital markets expertise & knowledge are in high demand in the mutual fund industry. The mutual fund industry provides a wide variety of job opportunities for people from various backgrounds. Many of these include opportunities in advertising, marketing, investment management, product creation, recruitment, human resources, risk, and administrative regulation.
Who is a Mutual Fund Agent ?
Mutual Fund agent is an intermediary who facilitates in the selling of mutual fund schemes to the investors. The agents remain in direct contact with the investors and recommend mutual fund schemes to the investors as per their risk appetite, investment horizon & financial goals. Agents need to remain updated about the events in the financial markets, new product launches, opportunities for investments, etc. so as to offer advice on investments accordingly.
A mutual fund agent also educates and informs potential investors about the myriad benefits of investing in mutual funds schemes and how these can help them achieve their long-term financial goals.
Responsibilities of a Mutual Fund Agent
A good mutual fund agent handles the following responsibilities:
- Educating potential investors about the effectiveness of mutual fund investments in wealth creation and achievement of financial goals in the long term.
- Informing investors about the different mutual fund schemes available in the market for investment.
- Aiding investors in carrying out mutual fund transactions (buying, selling and switching), as and when needed.
- Suggest changes in mutual fund portfolios as per the changing market trends and conditions.
- Helping investors in minimizing the risk and maximizing the profits from their investments.
Process to become a mutual fund agent
According to the AMFI and SEBI Regulations, the Mutual fund houses shall not deal with the intermediaries who are not registered with AMFI and haven't obtained their ARN.
Eligibility criteria for becoming a mutual fund agent is as follows:
- The minimum qualification required is class 12th or class 10, with a 3 years diploma.
- To become a Mutual Fund Agent, the applicant should have reached a minimum age of 18 years.
After passing the eligibility criteria mentioned above, the applicants need to clear the NISM VA Mutual Fund Distributors Examination. After that, they need to register with AMFI and get an ARN to start operating as a mutual fund agent.
The fees applicable for getting an ARN is Rs. 3000 + 18% GST which must be submitted in a draft along with the application.
For senior citizens, who are willing to become mutual fund distributor must undergo the training program CPE (Continuing Professional Education).
Also Read: How to Renew ARN Code Online
Commission structure for a mutual fund agent
A mutual fund agent can generate a revenue source for themselves via the commissions paid out by the AMCs or distributors. A mutual fund agent/ distributor can earn commissions on sale in different cities, in the following way:
Trail Commissions: Trail Commission is the primary source of income for the most MF agents/distributors, This is a recurring payment made to the distributors by AMCs for selling a mutual fund scheme to the investors. The distributor receives trail commissions from AMCs until the investment is withdrawn by the investor. The trail commission is calculated on the annual AUM (Asset Under Management) however, it is paid out every month.
The commission structure varies across schemes & AMCs. Also, the trail commissions have a different structure for commission on the sale of schemes in T-30 cities(Top 30) and B-30 cities(Below the Top 30). However, it is only different for the first year and after that, it is the same for both.
Due to a very high share of T-30 cities in total AUM, special incentives in the form of commissions are offered to agents in B-30 cities to bring more investments.
SIP Additional commissions: This is a special commission paid out by some AMCs on the fresh selling of SIP investments in a mutual fund scheme. This commission varies across schemes and is paid out on the SIP for the 1st month.
Frequently Asked Questions about Becoming a Mutual Fund Agent
Q. How to mutual fund agents earn money?
A. Mutual fund agents earn commission from asset management companies and distributors for the units of mutual funds they sell. Agents also earn trail commissions on mutual fund investments made by their clients till redemption. The commission structure depends on various factors, such as the AMC, scheme or city.
Q. How much does it cost to become a mutual fund agent?
A. Becoming a mutual fund agent costs almost nothing. One has to pay a small registration fee for appearing for NISM VA Mutual Funds Distributor Certification Examination, and an application fee for AMFI Reference Number or ARN code. That is all the expense you need to become a mutual fund agent.
Q. Can I become a full-time mutual fund agent?
A. Yes. You can be a full-time mutual fund agent and earn a great living. Moreover, you can also be a part-time mutual fund agent and earn a passive income. It is a lucrative career opportunity for people from different walks of life – from fresh graduates and house wives to retired professionals and people simply looking for a new career.
Q. What is the minimum educational qualification to become a mutual fund agent?
A. Anyone who has cleared class 12th examination or completed a three years’ diploma after class 10th can take the NISM VA Mutual Funds Distributor Certification Examination and register with AMFI to become a mutual fund agent.
Q. What is the minimum and maximum age to apply for an ARN number?
A. A person should be at least 18 years of age to apply for an ARN number for mutual funds distribution. Furthermore, there is no maximum age to become a mutual fund agent.