How to Become a Mutual Fund Agent Step-by-Step
By Urvashi Arya
These steps can be taken to become a Mutual Fund Agent:
Step 1: Applying to take the NISM exam
By visiting the NISM website, the prospective candidate must register for the NISM Series VA Mutual Fund Distributors Certification Examination (National Institute of Securities Market). The exam is offered at NISM facilities, and the registration cost is Rs. 1500 (excluding GST). The candidate can download the PDF file for exam preparation after completing the payment and, if the registration is successful, can also buy hard copies of the study materials from nearby bookstores or online retailers.
There will be no deducting marks for incorrect responses in the 100 MCQ questions that make up the exam. The candidate must receive at least 50%, or 50 points, to pass the test.
The applicants can study the subject matter using the NISM's study materials, and they can practice by taking any of the numerous practice exams or mock exams made accessible on NISM and other websites.
Step 2: Obtaining a passing score on the NISM mutual fund distributor exam:
The next stage for candidates would be to show up and pass the test. The results will be visible on the test screen just after the trial. The candidates can access the certification in electronic format on the NISM website, and a physical copy will be sent to the address they provide within 30 business days.
After completing the Series-V exam, the certificate will remain valid for three years. The CPE Program's 3-year validity period is likewise the same.
NISM Mutual Fund Distribution Certification Renewal
Anyone with one of the following mutual fund certificates who works in the mutual fund's sales or distribution is qualified to renew their certification:
(a) Mutual Fund Distributors Certification Examination, NISM Series-V-A
(b) Mutual Funds Distributors Continuing Professional Education: NISM Series-V-A
(c)Module for AMFI Mutual Fund (Advisors)
(d) IICM: Mutual Funds Refresher Course
(e) CIEL: Mutual Funds Refresher Course
By showing up and passing the NISM Series V examination or the NISM CPE Mutual Fund Distribution Program, they can revalidate or renew their license, which expires in a year.
Step 3: obtaining the ARN from AMFI
The candidate must go through the necessary KYD (Know Your Distributor) process and apply to AMFI for an AMFI Registration Number to begin selling or providing mutual fund advice after passing the NISM distributor test. The candidate would have to fill out the ARN application form with information such as their PAN, identity information, NISM Distribution certificate number, and other facts.
According to the specifications, the properly completed forms must be submitted via CAMS-KRA (KYC Registration Agency) either physically (at the CAMS office) or electronically. The ARN number will be provided to the Mutual Fund Agent following the successful verification of the forms and papers, and the card will be delivered to the specified address within a few days.
Obtaining an AMFI Registration Number costs money.
Step 4: Registering with Distributors or AMCs
The advisor can begin selling mutual funds to his clients and collecting commissions once he receives his ARN number. The mutual fund agent must now negotiate contracts with the AMFI distributors to sell the funds and collect commissions on them. The distributors would pay the agreed-upon commission on the mutual fund schemes that the agent marketed.
Also, the mutual fund advisor can directly contract with AMCs or fund houses as a distributor to sell their mutual funds.
It is preferable to connect with distributors to ensure the registration and documentation requirements are met while entering into agreements with various fund houses.
Commissions for Mutual Funds Advisors:
Many mutual fund schemes and Fund Houses or Asset Management Companies have varying mutual fund agent commission rates. Each AMC has its system for paying commissions to distributors, and they have also established several commission rates ranging from 0.1% to 2% for various category types, such as debt, equity, and hybrid.
The commissions are paid to the distributors every month by the AMCs based on the total Assets Under Managed, which is determined annually (including SIPs for the year and lump-sum investments). The expense ratio of the mutual fund scheme includes the commission that the AMC paid on the plan.
The commission varies throughout the cities as well. The trail commission is paid for the following in the mutual fund commission structure:
T-30 Cities: The AMCs would give the mutual fund schemes the same predetermined commission in these cities. For the first year, no additional incentive is given for investments or SIPs in mutual fund schemes. The commission is subject to quarterly adjustments by the AMCs or Fund Houses (before, an upfront commission was given to distributors for initially selling the plans for SIPs and Lump Sum).
2. B-30 Cities- The fund houses offer a specific incentive, the Master B-30 Incentive, where the AMCs would be paying extra incentive commission following the B-30 Cities' (below-top 30) investors.
Certain fund houses also provide specific incentives, such as additional SIP commission (upfront), paid to distributors or mutual fund agents for pitching new SIP investments of the mutual fund schemes. This is in addition to the trial commissions paid for the year. Only the amount of the first SIP that investors make is used to calculate the SIP additional commission.
Career as a mutual fund advisor:
The Indian mutual fund industry has expanded quickly during the past ten years. According to AMFI data, the overall AUM (Assets Under Managed) as of April 2020 is around Rs. 24 lac crores, up from Rs. 11.86 lac crores in April 2015, a two-fold rise in just five years.
By 2030, the Indian mutual fund industry hopes to have ten crore investors and an AUM of Rs—100 lac crores. The mutual fund sector has a wide range of options, as seen by the significant rise in the data on mutual funds. Further, there is a need for more fresh entrants into the market to serve the expanding clientele because there need to be more financial agents, advisors, or distributors to meet our nation's investors' needs.
Regarding salary, a career as a mutual fund advisor can be very lucrative. The advisors have limitless potential to increase their incomes because the commission collected grows along with the clients' numbers and the investments they make.