Know About A Mutual Fund Agent Or A Mutual Fund Broker

This article explains you about who are a Mutual Fund agent or broker and their major work in MF field. This also clearly explains you about the requirement of a MF agent. You can refer this article for how to become a MF agent and benefits of being a Mutual Fund agent. At present as on February 2012 there had been some changes in the MF agent certificate renewal process by NISM which also briefly explained here. This article finishes with the difference between a Mutual Fund agent and an Advisor.

Who is a Mutual fund Agent?

A Mutual Fund agent is a person who obtains a valid certificate through the exams conducted by the National Institute of Securities Markets (NISM). Normally all the transactions by an individual with the share market required a broker or an agent. Likewise the combined investment plan, Mutual Fund investment also required an agent. Securities and Exchange Board of India (SEBI) needs an agent to take care of all the procedures to be done properly for an investment by knowing the time to time updates in the procedure on the way to reduce the efforts of investors. For an example, to invest in any Mutual Fund scheme an individual should have Know Your Customer (KYC) identity number. Previously there will be a separate KYC number for every separate MF investment, but now with one KYC number an individual can invest in number of schemes. To know such things and to update accordingly SEBI required an agent.

What are the major work of a Mutual Fund agent?

The major work for a Mutual Fund agent is to explain clearly about a particular scheme which an investor opts for. The agent should not act like an advisor for the investor. For this every agent should know all the active schemes and its particulars like minimum investment for a buy or in a Systematic Investment Plan, entry load, exit load etc. An agent should know about a scheme in depth up to in which category the particular schemes have planned to invest the money collected from all investors and the previous year's performances. An agent should not recommend a particular scheme to the investor as an agent is not an advisor. In short an agent should be like a updated Mutual Fund Catalogue where an investor can get all the active schemes of various Asset Management Companies (AMC)and its complete information.

Why a Mutual Fund agent is required?

By this time every reader might know about who are a Mutual Fund agent and their works. As explained above a Mutual Fund agent is required to explain an investor about a particular scheme and should explain about the rules and regulations to invest in that scheme. Particularly whether a scheme is an open ended or closed ended should be known by the investor. Normally an agent should help the investor to fill the form to invest in a scheme. An agent can be the active member of one or more Asset Management Companies (AMC), because an agent will have the application forms of the AMC in which he is an active member. An agent is not only helping the investor in filling the form, but also to help them how to exit from a scheme or switch from one to other and all the services regarding the Mutual Fund investment. In complete an agent is required to take care of all the transactions regarding the Mutual Fund investments and acts in lieu of the investors in order to help them.

How to become a Mutual Fund agent?

Till May 31, 2010, a certificate exam has been conducted by AMFI in the name of AMFI Mutual fund (Advisors) Module and the certificate should be renew by the AMFI Refresher Course Program. From June 1, 2010, onwards the same certificate exam is being conducted by National Institute of Securities Markets (NISM) in the name of NISM-Series-V-A: Mutual Fund Distributors Certification Examination and frequently the certificate have to be renewed by attending Continuing Professional Education (CPE). After attaining the Certificate from NISM, a person is eligible to act as an agent, but cannot start an AMC. So he needs to apply for the membership as a distributor for the existing AMCs. If his application is accepted by the AMC, then he can start working as an agent/ distributor of the existing MF schemes of that AMC.

Check out the NISM website mentioned below for the updates regarding the application and fees details for exams and all other related information to apply for the certificate exam.

Benefits of being a Mutual Fund Agent

Normally some of the Mutual Fund agents are doing this work for their side income. Actually anyone can do this as their part time job, because mostly we need to meet the investors only after their working hours or on weekends. The agents will get different commissions from the AMC for which they are working for. Commission a agent can earn is of two types, one is from the investor and other is from the AMC. Investor commission will be given to him whenever he invests through him and the AMC will award a Trial commission depends on the time period the investment is with the AMC. For instance an investor's investment is about one lakh rupees through a particular agent, then the agent will be awarded with some 0.5% of that as a trial commission. This percentage may vary from AMC to AMC. However these commissions are hidden to the investors and will be charged by the AMC as a service charge per investor per year. We can invest in mutual funds directly without going through an agent, but then the agent commission will be pocketed by the AMC itself. Anyway if we invest in a scheme the percentage of service commission by the AMC will never be changed.

Latest updation regarding the Certificate renewal process

From 1st June, 2010 onwards, NISM has framed the fee for the Continuing Professional Education per day is 1500 and a person should attend this program and renew their certificate within 6 month from the expiry of the current certificate. A person need to attend compulsory one day for renewing the certificate. This will be in effect up to 1st June, 2012 .

From June 1, 2012, the month has been increased to 12 from the date of current certificate expiry date. The number of days to attend the program also increased to 2 days. These two days can be consecutive or selective by the certificate holder. The fee structure also framed as 1700 rupees per day if the parson select for consecutive days and 1800 rupees per day if they opt for single day.
The only thing which is unchanged is next validity period will be extended for 3 years from renewal.

Understand the difference between the Mutual fund agent and an Advisor

Agent and Advisor are not one and the same, they are different in their profession. Agent will work for the commission they will earn from the AMC. The advisor will work for the commission they earn from the investor. Advisor should thing about the profit that their client will earn for each financial year. Agents will always thing about the commission that they will earn from the AMC. They will try to promote the company schemes which will offer more percentage for them and will least bother about the returns that their customer receive. For this main reason SEBI had announced that no agent should act as an advisor for the investor.


Guest Author: Manchuvaru R Reddy02 Mar 2017

I wanted to become a Mutual Fund - Agent / Advisor / Distributor. Please advice me how to go about, I am IRDA passed health insurance agent. I am based in Bangalore. Whom should I contact, what is the basic qualification, age, experience and the procedures to be followed.

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