How To Become Mutual Fund Advisor

Mutual fund advisory is exciting for those with a financial and investment interest. These professionals help guide clients through the complexities of mutual funds to achieve the same financial goals. Considering the demand for professional advice is increasing, great potential exists for future advisors who could make a positive difference. In this article, we will explore the crucial steps and requirements that will help you become a mutual fund advisor.

Steps to Become an Authorised Mutual Fund Advisor

The various steps to follow to become a mutual fund advisor are as follows:

1. Register for the NISM exam

You need to enrol for the NISM Series VA Mutual Fund Advisor Certification Exam by logging on to the official website of NISM. The registration charge for the exam is Rs.1500, not including GST, and the test is conducted at NISM centres. After payment, a successful registration allows the candidate to download the PDF File for exam preparation or purchase hard copies of study books from local bookstores or online retailers.

The exam consists of 100 multiple-choice questions worth 1 mark each, with no negative marks for incorrect answers. Candidates must earn a minimum of 50 marks, or 50%, to pass.

Students can review material from NISM’s study guide and gain practice through numerous NISM VA mock exams or practice tests accessible on NISM and third-party sites.

People over 50 years old or professionals with over 10 years of experience distributing or investing in mutual funds qualify for NISM Mutual Fund Distribution Certification by selecting one of the following options:

• Successfully take and clear the NISM Series VA Mutual Fund Advisor Certification Exam.
• Participate in the Continuing Professional Education (CPE) Training Program NISM offers. This program includes a comprehensive 6-hour classroom training session in one day, culminating in an assessment at the conclusion. The fee to register for this program is Rs. 2,500, and applications can be submitted online through the NISM website.

2. Pass the NISM Exam

If the aspiring candidate clears the NISM exam, then they will be provided with their certification to become a mutual funds advisor. The certificate will be available for them about 30 days after their test results as a hard copy, but its e-format can be downloaded instantly once test results become available. From the date of the examination, the certificate’s validity lasts a total of three years. The CPE Program also has a validity of three years.

3. Know Your Distributor

After rigorously studying and passing the certification exam, the candidate undertakes a compulsory “Know Your Distributor” procedure. This process occurs when seeking approval from the Association of Mutual Funds in India to obtain an AMFI Registration Number to initiate selling or advising on mutual funds. The applicant must furnish their permanent account number, NISM Distribution credentials, identification particulars, and additional information in the registration form.

All properly filled forms necessitate submission through CAMS-KRA either physically at a CAMS office or virtually. Once the records are duly verified, the registration number shall be attributed to the candidate (now a mutual fund consultant), and their identification card will be delivered to the listed address within a few days.

4. Register with AMCs or Distributors

Once the mutual fund agent has obtained their ARN number, they are a full-fledged MF advisor. Now, they can begin selling to clients and start earning commissions for the same. The next step is to negotiate with AMFI distributors to sell these funds. Distributors pay a commission that is agreed upon based on the number of mutual funds schemes sold by the advisor. The advisor also has the option to enter into agreements with fund houses or AMCs themselves, rather than their distributors, for selling mutual funds.

Criteria to Become an Authorised Mutual Fund Advisor

• Age Limit: The candidate should be at least 18 years of age. Though there is no upper age limit, companies primarily look out for those candidates who are beginners in their careers and might seek long-term growth.
• Educational Qualification: A bachelor’s degree is required in finance, business administration, economics, or any other related field. Higher degrees such as an MBA enhance job prospects and credibility.
• Certification: One should have certification from well-known regulatory bodies such as the Association of Mutual Funds in India or a Financial Industry Regulatory Authority. National Institute of Securities Markets NISM Mutual Fund Distributors Certification would also be helpful.
• Financial Knowledge: It is crucial to understand the financial markets, investment strategies, and products, including mutual funds, and their accompanying risk factors and general market trends.
• Communication Skills: Knowing how to communicate with the client effectively to explain complex financial matters in simple language and demonstrating strong interpersonal skills to build great relationships and trust with the clients are crucial.
• Analytical Skills: The capacity to analyse financial data and market trends is very important for making informed recommendations. Good-quality problem-solving skills will solve all the issues that arise in the minds of their clients.
• Client Management: An effective client management skill is pivotal to maintaining relationships, understanding clients’ requirements, and giving clients tailored investment solutions.
• Continuous Learning: There should be a commitment towards learning and keeping updated with changes in regulations and developments in the market for success in this field.

Benefits of Becoming a Mutual Fund Advisor  

• • Flexible Career Path: As a mutual fund advisor, you will be provided the scope to work independently or with a financial institution. Therefore, this is a fantastic career you can easily adjust according to your lifestyle.
  • Income Potential: Commission-based and incentive earnings make mutual fund advisors a good possibility for high income.
  • Professional Growth: Using this job, continuous learning is possible by enhancing knowledge about financial markets and investment strategies, which pushes for career growth and expertise.
  • Relationship with Client: The reward is building long-term relationships with clients by helping them achieve their financial goals and secure their future.
  • Market Demand: More people are looking for professional financial guidance, and the demand for qualified mutual fund advisors continues to increase, thus providing strong job security.
  • Satisfied Personal Life: Advisors feel a sense of personal fulfilment in empowering clients with financial independence and providing valuable, life-changing investment insights.
  • Access to Free Resources: Through partnerships with financial firms, one can thus acquire various useful tools and extensive, insightful research to enhance their capacity and be successful in their position.

The Bottom Line

Becoming a mutual funds advisor is a reputable job due to the plethora of roles MF advisors play. They manage portfolios for risk, assess their client’s financial goals, and carefully track funds they can curate for their clients. The process to become a mutual fund investment advisor is straightforward and well established. With one’s NISM accreditation and ARN number, one has the right to practice being a distributor or seller of mutual funds in India.