Mutual Fund is an investment vehicle that pools money from multiple investors to invest in one or a group of companies or debts or bonds, or mixed options. Mutual Funds can be subscribed through different channels with agents being the prominent ones.
This article emphasises “How to become a Mutual Fund Agent in India?”. The article also focuses on mutual fund agent salary, mutual fund agent exam syllabus, their responsibilities, skills, eligibility, pros and cons, earnings, etc.
What is a Mutual Fund?
A Mutual Fund is a professionally managed investment vehicle. It collects money from a number of investors with a common interest and invests it in bonds, equities, government securities, etc.
The gains from the fund are proportionately distributed among its subscribers. In simple words, a large number of investors pool their money to make up a mutual fund.
Who is a Mutual Fund Agent?
A mutual Fund Agent is a finance professional who facilitates buying and selling of mutual funds. They are compensated through commissions from the distributor or the Asset Management Company (AMCs) with whom they are associated.
They must possess the skill to research and identify the best investment options based on performance and value addition.
They need to keep up with the market dynamics and evaluate the developments to understand the rewards and implications. Being a mutual fund agent requires a high level of financial knowledge of bonds, equities, securities, etc.
Skills Required to Become a Mutual Fund Agent
To be successful in securities market as a mutual fund agent, an aspirant must have the following skills.
- Excellent Communication and Interpersonal skills
- Good understanding of Financial Markets
- Analytical skills
- Good financial research capability
- Understanding of risk exposures and investor security
- Empathy and Integrity
Roles and Responsibilities of a Mutual Fund Agent
Mutual Fund agents have sensitive responsibilities to their clients, distributors, and the investments they handle. The responsibilities of a mutual fund agent are
- Mutual fund agents must research and identity reliable mutual funds to propose to their clients.
- They must be upto date with market developments and regulatory changes and convey key changes and impacts to their clients.
- They must actively engage in acquiring new clients and building strong and long-lasting relationships.
- Mutual fund agents are required to manage a portfolio of funds and clients and provide timely advisory.
- They must maintain records of transactions and regularly provide performance reports to their clients.
- Mutual fund agents must strictly adhere to ethical standards and regulatory compliances.
Eligibility to Become a Mutual Fund Agent
A candidate must have the following qualifications to become eligible to work as a mutual fund agent.
- Completed 12th standard preferably in Commerce stream.
- Have a degree or diploma in commerce or finance background (preferable but not mandatory).
- Have a deeper understanding of mutual funds and financial markets.
- Must clear the Mutual Funds Distributors Certification Examination.
- Enrolled as an agent with a mutual fund distributor or an AMC.
How to Become a Mutual Fund in India? A Step-by-Step Guide
Here is a step-by-step guide to becoming a Mutual Fund Agent in India:
- After completing the 10th standard, take up the commerce stream for the 12th standard.
- Enroll in a degree or diploma preferably in commerce or finance specialization.
- Complete the program and enrol for the Mutual Fund Distributors Certification Examination and clear it with at least 50%.
- Apply for an ARN number with the Association of Mutual Funds in India (AMFI). After receiving the registration number, associate with a mutual fund distributor.
Certification Examination for Mutual Fund Agent
Mutual Funds Distributors Certification Examination is conducted by the National Institute of Securities Market. It is the only examination in India for mutual fund agents, distributors, employees of AMCs, etc. The exam serves as the benchmark education for those interested in taking up a career in mutual funds in India. The exam is open all year round across different exam locations in India. After enrollment, a candidate has 180 days to take up the exam and a one-time reschedule option of 15 days.
AMFI and Registration Process
Association of Mutual Funds in India (AMFI) is the nodal mutual fund organization in India. It operates under the ambit of the Securities and Exchanges Board of India (SEBI). All mutual fund agents are supposed to register with a distributor. An AMFI Registration Number (ARN) is allotted to an agent after clearing the NISM examination. The registration is quite simple and can be applied online on the official AMFI website.
Earnings of a Mutual Fund Agent in India
Mutual fund agents work on commissions. Depending upon the experience, AMC, mutual fund, and many other factors the commission varies between 0.1 to 2 per cent. There are two types of mutual fund agent commission. They are:
- Upfront Commission – It is paid when the agent onboards a new client or a fresh investment to other funds.
- Trail Commission – This commission is annually paid to the agent as long as a client remains a subscriber of the fund.
Pros and Cons
Pros of Becoming a Mutual Fund Agent:
- Highly rewarding career choice
- Flexible hours, work at convenience
- Great networking opportunity
Cons of Becoming a Mutual Fund Agent:
- No fixed income, commission-based.
- Fewer growth opportunities
- Unpredictable market, susceptible to customer anger
Summary
- Mutual funds are one of the most popular investment options available in the securities market. It is distributed to investors through different channels. Mutual agents play a vital role in bringing investors to scribe to a fund.
- Mutual Fund agents work on commission models and have high earning potential.
- To become a mutual fund agent, an aspirant must clear the examination conducted by the National Institute of Securities market (NISM).
FAQs
Is it Necessary to Clear the NISM Exam to Become a Mutual Fund Agent?
It is mandatory to clear the Mutual Fund Distributors Certification Exam organized by the National Institute of Securities Market to become a mutual fund agent.
How is NISM Conducted?
The National Institute of Securities Market (NISM) conducts mutual fund agent exams throughout the year. The exam pattern includes 100 questions with 1 mark weightage to each and should be completed in 2 hours. The minimum passing is 50% and there is no negative marking.
What is the Syllabus of NISM?
The syllabus for the MISM exam is created with the mutual fund as the core. It includes a wide range of topics including Investment landscape, concept, legal structure, regulations, fund distribution, taxation services, risks, returns, ethics, etc. A more detailed overview of the curriculum can be viewed on the official website.
What is the Difference Between Mutual Fund Agents and Mutual Fund Distributors?
A Mutual Fund Agent works for the MF distributor on commission. Similarly, a Mutual Fund Distributor works for Asset Management Company on commission.
What is the Difference Between Mutual Fund Agents and Investment Advisors?
Mutual Fund Agents work with only mutual funds as investment options. Investment Advisors advise on different investment options like equities, commodities, futures and options, debts, bonds, debentures, etc.
Are there Better Investment Options than Mutual Funds?
There are many other options for investment which greatly depend on market volatility, risk, returns, term, etc. The mutual fund has many advantages. However, it all depends on the client’s ability and expectations.
How Long does it Take to Become a Mutual Fund Agent?
It takes close to 3 months to get the AMFI Registration Number (ARN) after clearing the NISM examination.
Can I Become a Part-Time Mutual Fund Agent?
Being a mutual fund agent offers flexible work hours. There are no mandatory work hours. Aspirants can work part-time.
How do Mutual Fund Agents Earn?
Mutual Fund Agents earn through commission on the investments brought into a fund. They earn upfront and trailing commissions. Take a look at our article above to know more about how to become a mutual fund agent in India.