What Are The Responsibilities and Duties of a Mutual Fund Distributor License Holder

  • June 07, 2023
  • Dushyant Sharma
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In this digital era, the investor found all the investment knowledge with just one click. They get all the information online from the best mutual funds to the right time to buy. But investment in mutual funds required deep understanding and knowledge to gain good returns. 

 

Here a mutual fund distributor comes into the picture to help many investors to put things in the best perspective. In this article, you will understand everything about MFD from roles and responsibilities to Mutual Fund Distributor registration in India. 

 

Who is a Mutual Fund Distributor?

An individual or entity helping investors in buying and selling mutual funds in India is known as a mutual fund distributor. They earn commissions for bringing investors to mutual fund schemes.

 

Also, they help investors to find the right mutual fund on the basis of their risk capability and variation in a portfolio. Every individual who is providing these services needs to be registered with the Securities and Exchange Board of India (SEBI). 

 

Mutual fund distributors are considered safe because they are registered with SEBI. However, mutual fund distributors also help investors in investing, switching between mutual funds, and redemption. Periodically they help their clients based on their investment performance.

 

Mutual Fund Agent - A mutual fund distributor is also known as a mutual fund agent. The agent tracks all the functioning and performance of the mutual fund industry. Basically, this type of agent uses quantitative and qualitative analysis to get regular information regularly. 

 

They also need to keep an eye on new changes in the mutual fund industry, market, and economy. In addition, mutual fund distributors collaborate with different mutual fund houses to understand other investment options. 

 

Duties and Responsibilities of a Mutual Fund Distributor

A professional with skills, qualifications,s and expertise can offer investment advice. Before taking any decision, an investor should consult a certified mutual fund agent to get proper information. Below are the duties and responsibilities of a mutual fund distributor.

 

1. Educating the Investor

Investors came to an agent to get the right plan for their investment. Here mutual fund agents understand the financial goals, risk appetite, and portfolio diversification of an investor and help them achieve the goals. It also includes 

 

2. Evaluating Risk Tolerance

Before suggesting any investment plan, it is crucial to understand the risk appetite of an investor. Mutual fund distributors will create and then suggest to investors the right investment strategy after understanding the risk appetite of mutual fund investors. 

Let’s take an example: if investors don’t want to take high risk then investing in debt is a safer option as compared to equity. Hence, before creating a strategy the financial goals, expenses, financial status, and dependency must be checked.

 

3. Analyzing Investment Options

Once the investor understands his goal and requirement, the next step mutual fund distributors do is to analyze the market conditions. As per the condition, a distributor will suggest an equity mutual fund, debt mutual fund, or money market instrument. The distributor must be updated with the latest financial news and investment trends to offer the right and relevant advice.

 

4. Devising an Investment Strategy

After analyzing different investment options, the distributor needs to plan a suitable investment strategy. The strategy includes adding different investment options to maximize the return and minimize the risk. 

 

For example, combining debt mutual funds and equity mutual funds create a safer portfolio with consistent returns. The portfolio requires a consistent assessment as per the change in the investor’s goal. So, a distributor must be aware of the client’s portfolio and investment choices to suggest them timely changes when required.

 

5. Helping Investors in Portfolio Diversification

Diversification helps in managing the risk of the portfolio. A distributor must be aware of current market changes and new product updates. Also, a lot of research is required to track the best investment options across different sectors and markets. Therefore, a mutual fund distributor plays a crucial role in optimizing the investor’s portfolio and minimizing the risk. 

How to Obtain Mutual Fund Distributor License in India?

The Association of Mutual Funds in India (AMFI) registers Mutual Fund Distributor (AFD) in India. The AMFI issued certifications obtained from the National Institute of Securities Market (NISM). The registration process for an MFD license is in the following steps:

 

Step 1: Apply or Obtain a PAN Card

First and foremost thing, an applicant must have a Permanent Account Number (PAN) card before applying for the MFD license. 

 

Step 2: Complete the Know Your Distributor (KYD) Process

After getting the PAN card, the MFD license applicant must complete the KYD process by filling out the form along with the required documents.

  • Mutual Fund Intermediaries
  • Registrar
  • Transfer Agents

 

Step 3: Fill out the Registration Form

The applicant must register with the Association of Mutual Funds in India. The process goes by filling out the registration process along with the following attachments:

  • PAN Card
  • Proof of Residence
  • Applicant’s Photograph
  • Fee Payment

 

Step 4: Obtain the MFD Certification

The applicant must have a NISM certification but the applicant will be awarded with the certification when they pass the MSD certification examination from NISM.

 

Step 5: Apply for SEBI Registration

After clearing the examination, the applicant must register with SEBI by filling out the SEBI MSD registration form, documents, and fee receipt. 

 

Step 6: Showcase Strict Adherence to Training Requirements

After obtaining the license, the newly registered MFD must complete the training requirements as mandatorily directed by AMFI as well as SEBI. 

 

The MFD license registration is a remote service, its registration process and requirements are variable as per the agency directives. It is advisable to check the latest guidelines of AMFI and SEBI before applying for an MFD license.



How Registrationwala Can Help You in Getting Mutual Fund Distributor Certificate?

To start giving the service of mutual funds, a person must have an MFD license. But it's a long process, and for people who are not well-versed with the legal procedure. Here, at Registrationwala, we help people in the entire process of MFD certification. We can help you with:

  • File in your KYD details
  • Collect all relevant documents
  • Apply for MFD license registration
  • Apply for SEBI registration and 
  • Deal with post-registration formalities

Connect with us to know all the details of Mutual Fund Distributors' registration and certification. 

 

Also read:  The Ultimate Guide to Making Your Career as a Mutual Fund Distributor


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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