Mutual funds have become one of the most sought-after tools for wealth creation in India today, and hordes of investors are pouring into the market. As a result, the industry has seen unprecedented growth in the recent past. In Oct 2024, SIP investment amount reached an all-time high of Rs 25,322.74 crore, and the number of SIP accounts reached 10.12 crore. Moreover, the market is continuing to grow at a great pace, and showing no signs of slowing down any time soon. If predictions are to be made, the Indian mutual funds industry will expand at a CAGR of over 20 percent in the next five years from 2025 to 2030.

However, not all investors coming into the market have the knowledge and expertise necessary to make the right investment decisions or know how to invest in mutual funds. That is where mutual fund distributors come in! MFDs educate investors on how to invest and also aid in making investment decisions. However, the massive growth of the MF industry has led to an imbalance in the number of investors seeking investment and procedure-related advice and the number of distributors to cater to this need.

To fill this gap, AMFI has launched a campaign named – Mutual Fund Distributor Business Karein Shuru. – to attract individuals to the lucrative career opportunity as a mutual fund distributor. With this campaign, the regulatory body aims to increase the number of MFDs in India and help people create a career in the fast-growing sector.

How to start a Mfd (mutual fund distributor) business?

To start a mutual fund distributor business, individuals need to pass the NISM-Series-V-A: Mutual Fund Distributors Certification Examination. But passing the NISM exam may seem difficult, but here is some good news! You can get a Free NISM VA Mock test for practice and exam preparation. Also ZFunds is providing you with a free NISM Certification Training Program, so that you can easily clear your NISM exam, just register now!
After passing the exam, individuals need to register with AMFI and obtain an ARN number. As it is a mandatory requirement to distribute mutual funds in India.
Now get registered with each AMCs to start distributing mutual funds. Each AMC has its own empanelment process, which involves submitting your credentials and business plan. Or else you can become a ZFunds mutual funds distributor and earn up to Rs. 50,000/month commission.
Click here to know more details on – How to become a mutual fund distributor
Now establish a business infrastructure. This includes setting up an office space, obtaining necessary business licenses, and hiring a team of qualified professionals.
The next step is to develop a marketing plan. Reach out to potential investors through various channels, such as social media, seminars, and workshops.

Benefits of Mutual Fund Distributor Business

AMFI aims to highlight the benefits and long-term earning potential of a career in mutual fund distributors. Soon there will be TV commercials, print ads, and digital advertisements to educate and inform people about this career opportunity most are unaware of.

So let's move and learn about the benefits of running a mutual fund distributor business. Here are the key advantages:

1. Recurring Income - Mutual fund distributors earn trail commissions based on the assets under management (AUM). This can provide you with continuous passive income over time.

2. Low Initial Investment - This business does not require large capital to start. All you need is a certification from the regulatory authority (e.g., AMFI in India) and basic finance knowledge.

3. Flexible Work Hours - You can operate your business with flexible hours. This allows for a work-life balance, as you can manage your clients and meetings according to your schedule.

4. Wide Market Reach - Mutual funds appeal to a broad range of customers, from retail investors to institutional clients. This offers a large potential market for distributors to target and increase their business growth.

5. Diversification of Income Streams - Distributors can offer a range of mutual funds from different asset classes (equity, debt, hybrid, etc.), which means you can diversify your portfolio.

6. Growing Demand for Investment Advisory - With growing awareness about financial planning and investment in India, the demand for professional financial advice is increasing.

7. Reputation and Trust Building - You have to build a strong relationship with your clients based on trust and personalized advice.

8. Low Risk of Investment - Unlike direct stock trading or high-risk investments, mutual funds allow distributors to advise clients on diversified portfolios with managed risk. This helps both distributors and investors feel more secure in their investments.

9. Partnership Opportunities - Mutual fund distributors can partner with different mutual fund houses, expanding their reach and variety of products. This gives them flexibility in offering products that best match the needs of their clients.

10. Scalable Business - Once a distributor has established a customer base, the business can scale easily by increasing the number of clients, offering additional services (like SIPs, tax-saving schemes), or even building a team of sub-distributors.

11. Tax Benefits - Distributors may get certain tax benefits for running their business or earning commissions, especially if they register as a business entity.

14. Potential for Long-Term Wealth Creation - The compounding nature of mutual funds allows investors to build wealth over time. As the assets grow, the distributor's earnings also grow in line with the assets under management.

Association of Mutual Funds in India

The Association of Mutual Funds in India, also known as AMFI, is the regulatory body that oversees the mutual funds industry in India. It is a division of the SEBI or the Securities and Exchange Board of India – the regulatory body that looks over the securities and commodities market in India. The AMFI was formed in 1995 with the aim of boosting the development of India’s mutual funds sector.

Its members include mutual fund companies that roll out MF schemes for investment purposes. The organization not only strives to strengthen the mutual funds market in India but also to ensure that stakeholders maintain the highest levels of ethical and professional standards. Thus, the AMFI protects the interests of both mutual fund companies as well as people investing in mutual funds.

Let us now understand the role of AMFI in the Indian mutual funds sector.

Role of AMFI in the Mutual Funds Industry

The Indian mutual funds market has grown at a lightning pace, especially in the past few years. More and more investors are coming into the market with the objective of wealth creation. However, not everyone investing their money in MF schemes possesses sufficient knowledge about the various procedures and processes. As a result, these people are susceptible to frauds and scams, such as misuse of investors’ funds and mis-selling to the end customer. The Association of Mutual Funds in India was established to keep a check on such instances.

The diverse role of AMFI also includes resolving disputes arising in the mutual fund's investment space. This non-profit organization works towards the benefit of investors by enhancing transparency in the market. It also plays a key role in bolstering the trust of investors in the Indian mutual funds industry.

After discussing the role of AMFI in the mutual funds industry, you might be wondering about the objectives with which this regulatory body was established. Our next section discusses the same.

The objective of all India Mutual Fund Association

The AMFI was established with several clear objectives. The most important of these are explained below:

Amongst the main objectives of the AMFI is to ensure that all participants in the industry follow the highest ethical standards in their everyday operations.
The organization also oversees the operations of asset management companies AMCs and mutual funds agents, and distributors to ensure they follow the code of conduct and engage in fair business practices.
It also seeks guidance from SEBI regarding any issues about the mutual funds industry and escalates any issues in an appropriate and timely manner.
The AMFI also aims to inform and educate stakeholders about policy and regulatory developments.
This regulatory body also partners with other bodies in the sector to conduct research activities to find useful and actionable insights into the MFs market.
It takes action in case a distributor or asset management company is found violating the code of conduct or ethical standards.
The AMFI also maintains the integrity of the mutual fund intermediation mechanism and protects the interests of investors.

Conclusion

In conclusion, the MFD Karein Shuru campaign launched by AMFI aims to promote the mutual fund distribution business as a viable and rewarding career opportunity in India. The initiative highlights the growing potential of the mutual fund industry and the crucial role mutual fund distributors play in educating and guiding investors. With the Indian mutual funds market expanding rapidly, there is a rising demand for skilled distributors to bridge the gap between investors and financial products. Through this campaign, AMFI is not only encouraging individuals to join this profession but also emphasizing the long-term earning potential it offers. By becoming certified distributors through the NISM exam and AMFI registration, individuals can build successful careers while contributing to the growth of the mutual fund industry.

Also Read:

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Frequently Asked Questions about MFD or Mutual Fund Distribution Business

Q. What is the full form of MFD in mutual funds?

A. MFD stands for mutual fund distribution. Anyone above the age of 18 years can become a mutual fund distributor in India and start their own MF distribution business.

Q. What is the role of an MFD distributor?

A. An MFD distributor performs several tasks. These include educating clients regarding mutual fund investment opportunities, helping clients minimize risks and maximize returns, staying up to date with different mutual fund schemes and their past returns, and more.

Q. Is it mandatory to pass the NISM Series VA Exam to start an MFD business?

A. NISM Series VA certification is essential before applying for an ARN number with the AMFI. Thus, one cannot become a mutual fund distributor without clearing the NISM Series VA certification examination.