Become a Mutual Fund Agent

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. 

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 Agent or Distributor must undergo the training program CPE (Continuing Professional Education). 

Also Read: ARN Code - Purpose, Registration, Renewal, How to Apply 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.

More Information:

Nism VA Certification: Objective, Preparation Tips, Fees, Exam Certificate
EUIN Number: Purpose, Registration, Rules, Renewal Process
Mutual Fund Distributor Commission Structure
What is SEBI - Meaning, Functions, Powers, Regulations
Become Mutual Fund Advisor

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