How to Start a Mutual Fund Distribution Agency in India?

 In this article, you’ll learn the step-by-step process to start a mutual fund distribution agency in India. We’ll also explore different aspects of a mutual fund distributor, such as roles and responsibilities and commission earned.

What is a Mutual Fund Distributor?

A Mutual Fund Distributor is an authorised individual or entity distributing mutual fund schemes to investors. They facilitate the buying and selling of mutual fund units between Asset Management Companies (AMCs) and investors.

Steps To Start A Mutual Fund Distribution Agency in India

Register your Agency with ROC – To establish a Mutual Fund Distribution Agency, the first step is to register your agency with the Registrar of Company (ROC). It will lay a legal foundation for your agency.

Recieve a Permanent Account Number (PAN) – Obtain a PAN for your company to ensure compliance with financial regulations. It enables smooth financial transactions.

Set Up a Corporate Bank Account – The next step is to open a corporate bank account for your agency. It will facilitate efficient management of finances, commissions, and payments.

Appoint Director and Employees – Appoint at least two directors qualified to be mutual fund agents. They’ll be responsible for the smooth functioning of your agency in the mutual fund industry.

Roles and Responsibilities

Establish long-term partnerships with reliable Asset Management Companies (AMCs) to provide your client with a range of mutual fund options and enhance your agency’s credibility.

Identify and recommend potential mutual fund schemes to clients that align with their financial goals and risk tolerance.

Provide proper guidance and valuable investment advice to clients on portfolio management and mutual fund products.

Trail or Back-end Commission –

Trail commissions are associated with distributors’ total Assets Under Management (AUM). Distributors will earn this commission as long as investors remain invested in mutual funds through them. SEBI has mandated this type of commission as the sole mode of payment to distributors.

Conclusion

Establishing a mutual fund distribution agency provides distributors with a range of opportunities to engage with potential investors and assist them in achieving their financial goals.

Read More: https://www.insightssuccess.in/how-to-start-a-mutual-fund-distribution-agency-in-india/

Source: https://www.insightssuccess.in/

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