☞1.) Pass the NISM Exam

The first step towards becoming a mutual fund distributor is registering for and clearing 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 is comprised of 100 questions of one mark each. You can visit our dedicated page to learn more about NISM Series VA Certification.

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☞2.) Apply for an ARN Number

ARN code or number 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 frauds. Moreover, it also aids in recording investments made via a particular mutual fund distributor and calculating the total commission earned through those investments. Every individual or entity that wishes to start their own mutual funds distribution business must apply for an ARN number with the AMFI. This application process includes submission of various documents, 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 that is left to do is enter into agreements with AMFI distributors and sell these funds. These AMFI distributors pay a commission as per the agreement, based on the quantity of mutual funds schemes the distributor sells. In addition, the distributor can also partner with AMC Asset Management Companies, or fund houses and sell mutual fund schemes.

☞4.) Work Profile of Mutual Fund Distributor / Advisor

As mentioned above, selling mutual funds to investors may appear to be the entire job, but that is only a part of being a mutual fund distributor. Here are the myriad tasks that MF distributors carry out:

Follow the securities market trends to provide reliable investment advice to investors.
Stay up-to-date on the upcoming mutual fund schemes by keeping in touch with mutual fund managers. The financial expert should also prepare reports on the past and future (expected) performance of different sectors.
Prepare comprehensive reports on various mutual funds and their schemes.
Approach potential clients and discuss investment opportunities with them.
Educate these potential clients on mutual funds, schemes, returns, risks, charges and other aspects of mutual fund investing.
Help them figure out the most appropriate mutual fund investment option for them based on their risk profile.
Assist these clients in investing in mutual fund schemes of their choosing.
Follow up with these clients about their mutual fund investment journey and clear out any doubts.
Provide timely advice to help minimize risk and maximize returns from investments.

Benefits of Becoming a Mutual Fund Distributor

#1. Flexibility in work:	Mutual fund distribution offers the flexibility to work on one's own 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.

Commission Structure for Mutual Fund Distributors in India

Mutual fund distributors earn a handsome commission on the mutual fund investments of their clients. These commissions come as upfront as well as trailing mutual fund distributor commission. While the upfront commission is earned at the time of making the investment, an MF distributor earns a trailing commission for the entire time the client stays invested in the mutual fund schemes. Below is the mutual fund commission structure for the total commission earned by a mutual fund distributor if a client invests INR 1,00,000 annually for a period of 15 years.

No. of Years	Investment	Total Assets Under Management @ 12%	Trail 1st Year	Train 2nd Year	Total Commission
1	INR 1,00,000	NIL	INR 500	NIL	INR 500
2	INR 1,00,000	INR 1,12,000	INR 500	INR 560	INR 1,060
3	INR 1,00,000	INR 2,37,440	INR 500	INR 1,187	INR 1,687
4	INR 1,00,000	INR 3,77,932	INR 500	INR 1,889	INR 2,389
5	INR 1,00,000	INR 5,35,284	INR 500	INR 2,676	INR 3,176
6	INR 1,00,000	INR 7,11,518	INR 500	INR 3,557	INR 4,057
7	INR 1,00,000	INR 9,08,901	INR 500	INR 4,544	INR 5,044
8	INR 1,00,000	INR 11,29,969	INR 500	INR 5,649	INR 6,149
9	INR 1,00,000	INR 13,77,565	INR 500	INR 6,887	INR 7,387
10	INR 1,00,000	INR 16,54,873	INR 500	INR 8,274	INR 8,774
11	INR 1,00,000	INR 19,65,548	INR 500	INR 9,827	INR 10,327
12	INR 1,00,000	INR 23,13,313	INR 500	INR 11,566	INR 12,066
13	INR 1,00,000	INR 27,02,910	INR 500	INR 13,514	INR 14,014
14	INR 1,00,000	INR 31,39,260	INR 500	INR 15,696	INR 16,196
15	INR 1,00,000	INR 36,27,971	INR 500	INR 18,139	INR 18,639

Responsibilities of MF Distributors

☞ Educating the Investor

Not everyone hoping to invest in mutual funds possesses the required knowledge. It is the responsibility of a mutual fund distributor to educate his or her client on the many investment opportunities, AMCs, mutual fund schemes, risks, and more.

☞ 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. Several factors such as long-term and short-term financial goals, duration of investment, family status, financial responsibilities and more are taken into account to create this risk profile.

☞ Analyze and Suggest Investment Options

Based on the risk profile, a mutual fund distributor suggests mutual fund schemes to the investor. A distributor may suggest debt funds to minimize risk or equity funds to maximize returns.

☞ 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 a MF portfolio.

☞ Documentation

Mutual fund distributors manage discreet 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.

Start your own Mutual Funds Distribution Business with Zfunds

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. 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. Registering with ZFunds is super easy and does not take too long. You can start by installing our ZFunds Mutual Fund Distributor App from the Google Play Store or Apple App Store.

How to Select the Right Mutual Fund Distributor?

When it comes to building a strong investment plan, who you choose as your mutual fund distributor, advisor, or agent really matters. Here are some straightforward tips to help you make a wise decision:

1.) Check Their Experience: Start by looking at how long they've been working in finance. The more experience they have, the better they probably are at handling your money wisely.

2.) Ask for Recommendations: Don't be shy to ask friends or family if they have a distributor, advisor, or agent they trust. Hearing about their experiences can tell you a lot about whether a distributor is good or not.

3.) Personal Touch: Find someone who takes the time to understand what you want to do with your money. It's important that they create a plan that fits your needs.

4.) Do Your Homework: Take your time to learn about potential distributors, advisors, or agents. Rushing into a decision is not a good idea. Find someone who really fits with your financial goals.

5.) Double-Check Paperwork: Make sure all the paperwork and terms they give you are clear and honest. This helps you know they're trustworthy.

6.) Regulations Matter: Check if they follow the rules set by organizations like AMFI and SEBI. It's also good to see if they have the right certifications. This helps you avoid scams or bad practices.

What is the salary of a mutual fund distributor?

The salary 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:

☞ Commission Structure: Mutual fund distributors often earn a percentage of the assets under management (AUM) they handle for their clients. This commission can range from around 0.5% to 2% of the AUM annually. Keep in mind that this percentage can vary based on the type of funds, investment amounts, and the distributor's negotiation with clients.

☞ Fixed Fees: Some mutual fund distributors might charge their clients fixed fees for advisory services, financial planning, and investment management. The amount can vary based on the level of services provided.

☞ Experience and Expertise: More experienced and skilled mutual fund distributors might command higher fees or commissions due to their expertise and track record.

☞ 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.

☞ Geographical Location: Earnings can differ significantly based on the cost of living and the financial market conditions in different locations.

☞ Regulations and Compliance: Regulatory changes or requirements might influence the compensation structure for mutual fund distributors, especially in terms of transparency and conflict of interest.

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

More Resources to Read

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Frequently Asked Questions about Mutual Fund Distribution

Q. How do I become a mutual fund distributor or agent?

To become a mutual fund distributor in India, you must first register with the NISM and clear its Series VA Mutual Fund Distribution Certification Examination. Then you can apply for an ARN number with AMFI and partner with AMCs and other entities distributing mutual funds to start selling mutual fund schemes to your clients.

Q. What is the scope of the mutual funds business?

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.

Q. Is it mandatory to clear NISM Series VA Exam for distributors?

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

Q. Is it good to become a mutual fund distributor?

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

Income Potential: Mutual fund distributors have the potential to earn commissions based on assets under management (AUM).
Flexibility: The profession offers flexible work hours, enabling a balanced work-life schedule.
Client Relationships: Building strong client relationships and helping them achieve financial goals can be fulfilling.
Learning Opportunities: The dynamic financial industry provides continuous learning prospects.
Entrepreneurial Aspect: Distributors can establish their own client base and business.
Contribution to Financial Literacy: Educating clients about investments and financial planning is impactful.
Regulatory Awareness: Adhering to regulations ensures ethical and transparent practices.
Market Influence: Earnings can be influenced by market fluctuations.
Client Acquisition: Gaining and retaining clients requires effective networking and reputation-building.

Q. What is the difference between a mutual fund distributor and a broker?

A. 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 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.

Q. Can mutual fund distributors sell direct plans?

A. Yes, mutual fund distributors can sell both regular plans and direct plans of mutual funds to their clients.

Q. Mutual Fund Distributors Certification Examination (NISM-Series-VA)

As mentioned above, registering to appear for the NISM Series VA Mutual Fund Distributor Exam is the first step toward becoming a mutual fund distributor. The institute provides study material one can utilize while preparing for the certification test. It is a two-hour-long test that has 100 multiple-choice questions for one mark each. NISM charges INR 1500 as a registration fee to appear for the exam. Furthermore, these are NISM courses that one can apply for to take the preparation a notch higher. Free NISM mock test are also an effective way of getting ready for the certification exam. These will familiarize you with the exam pattern and eliminate any doubts about the format of the test. You can easily find NISM Series VA mock tests online and offline.