If you are working in the finance industry or as an insurance agent, you may specialize in car insurance, medical insurance, or other related areas. Alternatively, you might have an interest in becoming a Distributor/Agent/Advisor of Mutual Funds.
It’s worth noting that those who work in the Mutual Fund industry are referred to as Mutual Fund Distributors (MFDs) according to SEBI regulations. The use of terms like “Mutual Fund Agent” or “Advisor” is prohibited.
If you’re interested in selling Mutual Funds, there are a few things you need to know. Firstly, what are the benefits of becoming an agent, and how much can you earn from it? And secondly, what certification do you need to obtain to work in this field?
As a Mutual Fund Distributor/Agent, what will be your Job Profile:
- To inform the investors about the various schemes available in the market.
- To clarify the effectiveness of Mutual Fund schemes for investment in comparison to other competing products such as Bank Fixed Deposits, EPF, ULIPs, Equity, and Bonds etc.
- Help them to do transactions related to buying, switching, redemption.
- Guide them frequently on the performance of their investments.
Mutual Fund Distributor Job Profile
If you become a Mutual Fund Distributor/Agent, your job profile would include:
• Educating investors about the different available schemes in the market.
• Explaining the benefits of Mutual Fund schemes as an investment option in comparison to other products such as Bank Fixed Deposits, EPF, ULIPs, Equity, and Bonds, etc.
• Assisting investors with transactions such as buying, switching, and redemption.
• Providing regular guidance on the performance of their investments.
• Keep up-to-date with the latest industry trends, economic developments, and regulatory changes to provide clients with accurate and timely information on investment options and market conditions.
Getting NISM Certificate
Valid Certification is the first step towards becoming a mutual fund agent. To do so, you must pass the ‘NISM Series V-A: Mutual Fund Distributors Certification Examination’ conducted by the National Institute of Securities Market (NISM).
NISM Series V-A – Eligibility Criteria for Obtaining Certificate (Eligibility for Mutual Fund Distributor / Agent)
- The age of the candidate should be at least 18 years.
- Candidates should be at least 12th passed.
- Candidates who are 10th pass and have done 3 years Diploma are also eligible to become Mutual Fund Agent.
First Registration for NISM Series V-A:
To begin the process of obtaining the NISM Series V-A certification, you must first register for the exam. The exam is conducted by NISM in over 10 cities across different states.
The certification exam has a fixed fee of Rs. 1500.
Those interested in registering can do so through the official link provided by NISM, where complete details and guidelines related to registration can be found.
Upon completing the registration process, further information will be sent to the candidate’s email. After paying the fee, candidates will be able to download study materials from their dashboard.
In addition, study materials can be purchased from other portals, websites, or bookstores.
Pass the NISM Series V-A Exam:
The exam consists of 100 questions carrying a total of 100 marks, and in order to clear it and become an agent, the candidate must score at least 50%.
The exam is conducted online, and the candidate has two hours to complete it.
Upon finishing the exam and submitting the answers, the result is immediately displayed on the screen. The certificate obtained after passing the exam remains valid for a period of three years.
Obtain ARN from Association of Mutual Funds (AMFI):
Once you clear the exam, you are issued a certificate by NISM.
Only agents registered with the Mutual Fund Association in India are considered authorized to sell mutual funds, which is why an ARN number is issued by AMFI to every registered agent or distributor in India.
AMFI Registration Form can be downloaded through the official website of AMFI. Or take the ARN form from the CAMS site, fill it and submit it to the CAMS office.
Documents required for ARN Card
- NISM Certificate
- Address proof
- PAN card
- 3 passport size photographs
- Blank Canceled Check (Name printed)
- DD for 3000 in favor of “Association of Mutual Fund in India” payable @ CAMS Location
You will get all this information in the form.
KYD (Know Your Distributor) is a bio metric process, you can do it from the center of CAMS. Just like we do KYC for the investor, similarly there is KYD for the distributor.
For queries related to ARN Registration/Renewal mail at firstname.lastname@example.org or call 044 30212 482/483
After all of you finish the process of ARN and KYD, then your ARN card arrives at your given address.
As soon as you get the ARN card, you get ready to work for mutual funds.
How to do Empanelment with Mutual Fund House
After getting the ARN card one has to register himself with the Mutual Fund Association.
On the basis of this ARN card, you can do the work of all mutual fund companies.
ARN card means that you have agreed to do the work of Mutual Fund (IFA). But until you do Empanelment with Mutual Fund House, you will not get commission for the work you do.
For this, it is necessary to do Empanelment with the Fund House (AMC) you want to associate with.
You can do Empanelment in two ways (Offline or Online)
More and more fund houses are now adopting the method of online empanelment. For this, you have to go to their website and fill your details.
You have to upload your photo, canceled check in image format. The method of each fund house changes slightly.
For more information about this read – How to do Empanelment in Mutual Fund House.
Offline Empanelment – Now this method is not being used much. Empanelment form can be downloaded from the website of the fund house or can be taken by visiting their branch.
List of documents you will need with the form
- ARN card
- PAN card
- A Self-Declaration form stating compliance of circulars issued by AMFI
- KYD Acknowledgment
- Canceled Check Copy of the a/c no. mentioned on empanelment form.
In case of a firm or company, the additional document is required which clearly states that all their employees are AMFI / NISM qualified
Now it has improved a lot, many fund houses do empanelment online.
How much commission does a Mutual Fund Agent get?
It depends on the type of fund i.e. Equity, Debt, ELSS, Liquid type schemes have different commission rates.
It ranges from as low as 0.02% (two paise) to 1.00% . All commissions are now paid through trails. Upfront commission is no longer available.
Means if you did business of 1 lakh then you will get commission between 20 to 1000 and that too on monthly basis. Suppose your business commission for this month is 5000, then you will get 5000 / 12 months = 416.67 every month.
Further, as the valuation increases, so does the commission. As an agent in mutual funds, you can also get commission of 1 lakh per month.
It all depends on your hard work, for this your AUM must be above 10 crores. In the beginning, your commission rate is low, for this you can try to increase the talk with RM.
To get a good commission rate, you have to make a business commitment.
New rules are coming from the regulatory body, because of that the commission rate, and due to some restiction, there is difficulty in working in it.
There has been a decline in new ARN registrations. Between April 2019 and January 2020, 7223 new distributors were added, while in the previous year 15000 people became new distributors.
You have ARN card, and you have done empanelment with some fund house as per your requirement. Now your work starts properly.
Next comes the big question of how to work. If you see schemes in the market, then there are many. Which scheme would be good?
How to talk to investor, how to explain about funds and returns. Know more about commission, how to sustain on low commission.
Need answers to some of these questions and comment for knowing more.
To work as a mutual fund distributor, you need to pass the National Institute of Securities Market (NISM) exam “NISM Series V-A: Mutual Fund Distributors Certification Examination.” The eligibility criteria include being at least 18 years of age and having at least passed the 12th grade, though those who have passed the 10th grade and have a 3-year diploma are also eligible.
The exam costs Rs. 1500 and consists of 100 multiple-choice questions that you must answer in two hours. You must score at least 50% to pass.
Once you pass the exam, you will receive a certificate from NISM, which is valid for three years. You also need to obtain an ARN (Association of Mutual Funds) from the Mutual Fund Association in India, which is authorized to sell mutual funds.
You will receive the ARN card after you complete the KYD (Know Your Distributor) biometric process.
Once you have the ARN card, you can register with the mutual fund association and empanel with a mutual fund house to start working as a mutual fund distributor.