• ARN
• April 19, 2023
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Hello and welcome to my blog! Today I’m going to share with you how to become a mutual fund distributor in India. If you are interested in the financial sector and want to help people invest their money wisely, this could be a great career option for you. But before we dive into the details, let me explain what a mutual fund is and what a mutual fund distributor does.

A mutual fund is a type of investment method that pools money from many investors with the goal of putting it in a diversified portfolio of stocks, bonds, and other securities. The benefits of investing in mutual funds include professional management, diversification, and economies of scale. By investing in a mutual fund, you become a shareholder of the fund and can benefit from its performance.

A mutual fund distributor is an entity that sells and promotes mutual funds to investors. In India, there are three types of distributors: individual agents, banks, and financial institutions. Individual agents are the most common type of distributor and work on a commission basis. They are typically associated with a particular AMC (Asset Management Company) or MF house. Banks and financial institutions also sell mutual funds but typically do so through a relationship with an AMC.

So how can you become a mutual fund distributor in India? Here are the steps you need to follow:

1. Pass the NISM-Series V-A: Mutual Fund Distributors certification examination. This is a mandatory exam conducted by the National Institute of Securities Markets (NISM) that tests your knowledge and skills on various aspects of mutual funds, such as types, features, risks, returns, taxation, regulations, etc. You can register for the exam online and pay a fee of Rs. 1500. The exam consists of 100 multiple-choice questions and you need to score at least 50% to pass. You can find more details about the exam here.
2. Complete the KYD (Know your Distributor) process for mutual fund distribution. This is a verification process that involves submitting your identity proof, address proof, PAN card, bank account details, etc. to AMFI (Association of Mutual Funds in India), the industry body that regulates mutual funds in India. You also need to provide your biometric data (fingerprint and photograph) and sign a declaration form. You can find more details about the KYD process here.
3. Get the AMFI Registration Number (ARN). This is a unique number allotted to you by AMFI that identifies you as an authorized mutual fund distributor. You need to apply for the ARN online or offline by paying a fee of Rs. 3000 for individuals or Rs. 15000 for corporates. You also need to agree to abide by the code of conduct and other undertakings as mentioned in the application form. You will receive an ARN card or letter of registration with your name, photo, and validity period of ARN. You can find more details about the ARN here.
4. Empanel with UTI Mutual Funds. This is the final step where you need to register with UTI Mutual Funds, one of the leading AMCs in India, and start selling their schemes to investors. You need to fill an empanelment form online or offline and submit it along with your ARN card or letter, KYD acknowledgement letter, PAN card copy, cancelled cheque copy, etc. You will receive an empanelment confirmation letter with your code number and other details from UTI Mutual Funds. You can find more details about the empanelment process here.

Congratulations! You are now ready to start your journey as a mutual fund distributor in India. But how much can you earn as a mutual fund distributor? Well, that depends on various factors such as your sales volume, commission structure, client base, etc.

As you may already know, as a mutual fund distributor, you earn commissions from the AMCs for selling their schemes to investors. The commission structure varies from scheme to scheme and from AMC to AMC. Generally speaking, there are two types of commissions: upfront commission and trail commission.

Upfront commission is a one-time payment that you receive when you sell a scheme to an investor for the first time. It is usually calculated as a percentage of the investment amount or NAV (Net Asset Value) of the scheme. For example, if you sell a scheme with an upfront commission of 1% and the investment amount is Rs. 10,000, you will receive Rs. 100 as upfront commission.

Trail commission is a recurring payment that you receive every year as long as the investor stays invested in the scheme. It is usually calculated as a percentage of the AUM (Assets Under Management) or NAV of the scheme. For example, if you sell a scheme with a trail commission of 0.5% and the AUM of the scheme is Rs. 20,000, you will receive Rs. 100 as trail commission for that year.

The commission rates vary depending on factors such as type of scheme (equity or debt), type of plan (regular or direct), type of investor (retail or institutional), and type of transaction (purchase or redemption). You can check the commission rates of different schemes and AMCs on their websites or on platforms like Paytm Money or Groww.

So how can you maximize your earnings as a mutual fund distributor? Here are some tips:

• Sell schemes that have higher commission rates and lower expense ratios. This will ensure that you get more income and your investors get better returns.
• Sell schemes that have consistent performance and low volatility. This will ensure that your investors stay invested for longer periods and you get more trail commission.
• Sell schemes that suit the risk profile and financial goals of your investors. This will ensure that your investors are satisfied with your service and refer more clients to you.
• Sell schemes that have tax benefits or other incentives for investors. This will attract more investors and increase your sales volume.

I hope you found this blog post useful and informative. If you have any questions or feedback, please leave a comment below or contact me through my website. Thank you for reading and happy selling!