How to become a Certified Mutual Fund Investment Advisor?

A top mutual fund advisor in India matches your financial goals with the right schemes. They craft a portfolio tailored to optimize your returns.

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Who Is a Mutual Fund Advisor?

A mutual fund advisor helps investors choose the most suitable mutual funds based on their financial situation, risk tolerance, and investment goals. These professionals are certified by the National Institute of Securities Market (NISM) and registered with the Association of Mutual Funds in India (AMFI). A certified mutual fund consultant adheres to strict SEBI regulations by giving honest, transparent, and unbiased advice to clients, which ensures the interests of the clients are always prioritised.

Mutual funds have boomed in India in recent years, thanks to many benefits such as diversification, expert fund management, and liquidity. Digital convenience also has a hand in this growing popularity. You can quickly and easily start your mutual fund SIP from home by consulting with an online mutual fund advisor! But before you start investing, it’s important to understand how mutual fund advisors work, their roles and responsibilities, and how they are regulated to ensure you can choose the right advisor for your investment needs.

Roles and Responsibilities of a Certified Mutual Fund Advisor

1. A registered mutual fund advisor has a fiduciary duty toward clients. Fiduciary duty means acting in the best interests of the clients and making sure that their financial needs and goals are prioritised above the advisor’s interests. 

2. They uphold their fiduciary duty by fully disclosing all details about the mutual fund scheme and keeping everything transparent. They provide honest and unbiased advice to maintain the ethical standards set by SEBI. 

3. A mutual fund expert understands the client’s needs. They first assess the client’s financial situation and investment goals. This includes getting details about the client’s income, debt, expenses, assets, and savings. Then they assess the client’s investment goals, such as saving for a home, funding children’s education, or planning for retirement. All this data gives the mutual fund advisor a foundation to build upon, enabling them to offer comprehensive mutual fund advisory services.

4. Mutual fund planners are also responsible for creating a risk profile for their clients. This profile doesn’t just consider the level of risk the client is comfortable with but also evaluates their financial capacity to withstand market fluctuations. For example, it’s likely that an advisor would recommend debt mutual funds to someone with a low-risk appetite, and equity mutual funds to clients with a higher risk appetite and longer investment horizon.

5. Based on the financial situation, investment goals, and risk profile, the mutual fund planner suggests suitable schemes. 

6. Advisors educate clients about the fees linked with mutual funds, like exit loads and expense ratios. They also teach clients about important factors for selecting the right schemes, such as past 5 or 7-year fund performance, fund manager expertise and experience, and risk-adjusted ratios like Sortino and Sharpe ratios. They compare different schemes and present them to clients, so the clients can choose the most suitable one based on these criteria and make an informed decision.

7. They create a diversified portfolio, which minimises risks posed by market fluctuations. 

8. The role of a mutual fund planner goes beyond just suggesting the most suitable schemes. They also review and monitor the client’s portfolio on a regular basis. This is done to ensure that the fund’s performance and objectives stay aligned with the client’s financial goals and risk profile. They also monitor market trends and economic developments and make adjustments to the portfolio whenever necessary.

9. Mutual fund Investment Planner are also responsible for educating clients about the tax implications of their investments. They inform clients about taxes such as Short-Term Capital Gains Tax (STCG Tax), Long-Term Capital Gains Tax (LTCG Tax), Securities Transaction Tax (STT), TDS, and tax on dividends. It’s very important to understand the taxation associated with different schemes as overlooking taxes can reduce earnings.

How to become a certified Mutual Fund advisor?

To become a certified mutual fund advisor one must fulfil certain criteria. First, the candidate must have passed class 12th. While a bachelor’s degree isn’t mandatory, having a background in finance, economics, or banking is very advantageous. Secondly, the candidate must be 18 years old or above. If the criteria are fulfilled, the following steps can be taken to become a certified mutual fund consultant:

What Does a Certified Mutual Fund Advisor Do?

What to Look for in a Mutual Fund Investment Planner

Choosing the right mutual fund investment planner is crucial for effective financial management.

Expertise and Certification: Ensure the planner has relevant certifications, such as a CFP, and a proven track record in mutual fund investments.

Understanding of Your Goals: They should take the time to understand your financial objectives and risk tolerance before recommending investment options.

Transparency and Integrity: Look for advisors who provide clear information about fees, commissions, and any potential conflicts of interest.

Customized Recommendations: The planner should offer personalized advice based on your specific needs, rather than a one-size-fits-all approach.

Ongoing Support: Choose an advisor who offers regular reviews and updates to your investment strategy as market conditions and your goals evolve.

SEBI Regulations for Mutual Fund Financial Advisor

The mutual fund industry in our country is regulated by the Securities and Exchange Board of India (SEBI). With the growing popularity of mutual funds, SEBI has created many rules to protect investors and ensure transparency to keep the industry running smoothly. These regulations were first set into action in 1996, but they are regularly updated to adapt to changing market conditions and protect investors. A mutual fund investment planner must abide by these rules so they can provide the best advice to their clients. Some of these regulations for a mutual fund advisor are:

Difference Between a Mutual Fund Advisor and a Fund Manager

A mutual fund advisor is not the same as a fund manager. Here are the major differences between the two:

Mutual Fund Advisor

Fund Manager

The main role of a mutual fund advisor is to advise clients on different aspects of a mutual fund investment. 

The fund manager on the other hand manages the portfolio of a mutual fund. They generally manage assets worth hundreds of crores.

For their services, mutual fund investment advisors receive fees and commissions from clients and fund houses.

Fund managers are paid handsome salaries and performance bonuses by the AMC.

Advisors deal with their clients directly. 

Fund managers manage the money of a huge number of investors. Thus they have limited contact with them.

To become a mutual fund investment advisor, one must be certified by NISM and registered with AMFI.

Becoming a fund manager, however, is much more complex. It requires a finance-related degree and many years of experience in the industry.

Mutual fund advisors focus on their client’s goals and recommend suitable investments aligned with the client’s risk profile and financial situation.

Fund managers focus on the fund’s performance, meaning they are mainly responsible for making investment decisions that will maximise returns and minimise risks for the fund. 

faq's

Mutual fund advisors can earn a fee by giving their clients advice, but they mainly earn commissions on the mutual funds they sell. The amount depends on how much money the client invests, but generally, it ranges from 0.5% to 1% of the amount invested.

You should always consult with an AMFI-registered mutual fund advisor because not only are they certified and informed, but they also offer unbiased advice according to your financial situation, investment goals, and risk profile. Book a free session with one of Fincart’s AMFI-registered mutual fund advisors today!

You can find mutual fund advisors locally or online. You can connect online with Fincart today and get a free consultation with our AMFI-registered mutual fund advisors. Get expert advice on all your mutual fund needs from the comfort of your home!

How much commission a mutual fund advisor earns depends on several factors such as the AMC paying the commission, the channel used to get clients onboard, the amount invested by the client, and the fund’s Assets under Management (AUM ) or strategy. Thus the percentage of commission can vary between 0.1% to 2%, but generally, it’s somewhere around 1%.

The best mutual fund advisor is one who listens to your concerns and offers honest solutions after understanding your investment goals, risk profile, and financial situation. You can take advantage of Fincart’s investment services, and connect with AMFI registered mutual fund advisors to get the best personalised guidance you need to make informed investment decisions! Book a free consultation today!