Do you have working experience in the investment market?
Then, you can build a flourishing career here. You can start working as a mutual fund distributor and help clients with their investments. To start a mutual fund distribution business, you must follow many steps and formalities.
The various processes in building this business include obtaining the NISM certification, distributorship application, and fetching clients. A systematic approach will help jumpstart your business successfully.
Ready to jump into the details? Continue reading this post to learn how to become a mutual fund distributor and run an independent business.
Starting a Mutual Fund Distribution Business in India: Know the Basics
Establishing a mutual fund distribution business can be profitable for you and your clients or investors. But it’s important to be well-versed in the fundamentals of mutual funds and the investment market.
Mutual funds are pools of money funded by multiple investors, which can be invested in stocks or bonds. Banks, companies, and financial institutions issue these funds, and a professional fund manager handles them.
The profitability of a fund can depend upon its size, price, and market conditions. So, as a mutual fund distributor, you must know to predict a fund’s performance. You should also see the fund’s historical performance and future possibilities.
That way, you can guide your investors and clients to select the right fund. In addition, learn about the types of mutual funds and their characteristics. The fund types include –
- Stock funds
- Money market funds
- Target date funds
- Bond funds
So, before jumping into the mutual fund business, ensure you cover all the bases.
Get the NISM Certification
Before applying for mutual fund distributorship, you must appear for the NISM examination. It is mandatory to clear the NISM-Series V-A Mutual Fund distributor exam to receive a NISM certification. You can work as a mutual fund distributor with this certificate.
The exam consists of 100 multiple-choice questions to evaluate the fundamental mutual fund concepts. You have to obtain 50% marks to pass the exam successfully and receive your NISM certificate.
Getting the certificate is a major step in your mutual fund distribution business journey. Now, you can move on to the next step, applying for an ARN with the AMFI. For that, you need to submit identification, address proof, and related documents along with the ARN application.
Moreover, you need to complete the Know Your Distributor process to receive this number.
Collaborate with Stock Broker
After completing the AMFI application and obtaining the ARN, you are almost set to start your business. However, you must contact a stock broker or AMFI distributor to properly sell the mutual funds.
The AMFI distributor or broker will prepare an agreement deciding the terms of the collaboration. It will contain details about the mutual fund distributor commission, payment options, and payment cycle.
Every time you sell a mutual fund to a client, you will receive the specified commission as payment. So, if you partner with a fund house, the payment will depend upon every investor/client you bring in.
You can help your clients make better investment decisions and select appropriate mutual fund schemes.
That’s why it is important to research the broker before selecting them. Contact their office or visit their website to understand their business history. Also, check online if they have been associated with fraud or financial malpractices.
Also, try to join forces with a stock broker or fund house having extensive experience in the mutual fund and investment market. It will offer you significant exposure to mutual fund schemes and products, enhancing your knowledge base.
Onboard New Clients to Earn Commission
When you have completed all formalities and understood the agreement terms, you can officially start your mutual fund distributor business. You can now pitch your services to target clients.
To successfully onboard clients, you have to identify your target customer base. It can be senior citizens, working professionals, or students looking. Then, you can build your marketing and business strategies according to the audience’s requirements.
For instance, if you’re targeting working professionals in their mid-30s, offer them a scheme that fetches great returns. Similarly, while targeting senior citizens, provide them with funds ideal for long-term investment.
Moreover, always discuss all the rules required to invest in mutual funds and the customer’s responsibilities. Keep your audience in the loop during every investment process to keep them satisfied.
Benefits of Becoming Choice MF Distributor
Choice is among the most trusted financial institutions with a large client base offering mutual fund investment services. So, partnering with them will level up your mutual fund distributor business.
The benefits of mutual fund distributor working with Choice are –
- Trustworthy online platform with over 2500 schemes
- Exposure to more than 44 AMC partners and 24k franchises
- Excellent commission rates and stable income
- Marketing, sales, and customer support assistance
- Custom portfolio analysis (HNI clients)
- Goal-based investment and readymade fund baskets
Plus, Choice offers outstanding technical support through its user-friendly web platform and mobile application.
The Bottom Line
To become a mutual fund distributor and increase your business revenue, focus on marketing your services. You can talk to your broker or AMC distributor about any assistance they can provide.
Alternatively, you can build a professional website highlighting your products and services. Provide detailed information about your business offerings to attract and inform the customer properly.
Moreover, always improve your knowledge about mutual funds and strategies to improve investment earnings. It will enable you to provide better guidance to your customers.
