How Is A Mutual Fund Distributor Different From A Financial Adviser?

 Mutual Fund Distributor Different From A Financial Adviser

When it comes to splitting the two it’s hard to do, as both help in making investment decisions. That includes choosing MF schemes. Both are registered organizations and are governed by a separate governing body. As Mutual Fund Distributor is owned and controlled by AMFI (Association of Mutual Funds in India). Investment Advisers are also regulated by SEBI (Securities and Exchange Board of India).

Before you go any further, consider the differences and discuss who is a joint venture provider and an investment adviser?

Investment Adviser - An Investment Adviser is an individual or group that provides financial and investment advice. It even regulates security analysis as a refund, either through direct control of customer assets or through written publications. If he has sufficient assets to register with the SEC he is accepted as a Registered Financial Adviser or RIA. Investment Advisers are also known as "Financial Advisers". He assesses investor assets, liabilities, income and expenses and advises on an investment plan.

Mutual Fund Distributor - They can be a person or business that assists with the purchase and sale of MF units to investors. They earn income through commission means by providing (investment) leads (investment) in MF programs. It is expected that we do not know the investor's status, his risk profile and propose an appropriate investment plan to meet the needs of investors.

Receiving a commission does not mean that the operator of the Mutual Fund is allowed to trade the MF program to investors just to get a commission. Yes, the regulations are very strict on this.

Now let’s talk about eight points that help distinguish a Mutual wallet seller from an Investment Advisor.

Payment mode with tips

We all know that a mutual fund distributor is registered with AMFI, usually with your investors. The investor asks the distributor of the joint venture to buy / sell MF plans. In doing so the AMC gives the commission MFD. To avoid the misuse of MF programs SEBI has targeted AMCs. Paying the road commission only using the road model only. Also, not to give up any previous commissions or to prioritize any direct or indirect route commissions. Even competitions or sponsorships will be seen as prepaid. These investment advisers often charge fees rather than receive commissions from the AMC. So with this change to industrial investors.

Savings Work

Distributors differ from counselors in the sense that counselors are bound by archival work. That means they are committed to providing investors with reliable advice, while the distributors do not have that promise.

Testing and Verification

The test results for both mutual fund distributors and investment advisor are different. For MFD get a certificate approved by the National Institute of Securities Market (NISM). By removing their NISM Series V-A: Mutual Fund Distributors Certification Examination certification. For an Investor Advisor one needs to clear both levels 2 levels:

NISM-Series-X-A: Investment Advisor -Level 1

NISM-Series-X-B: Investment Advisor -Level 2

A mutual fund adviser must have a certificate in financial planning.

Counselors can advise but do not distribute

MFD has a point of bringing together those who can advise on the best MF programs. They help the investor understand the combined financial benefits, MF types and risks. They also guide investors on MF investments and meet the needs of investors. After that, they asked the investor to invest in the mutual funds. They continue to roll out the mutual fund program. Investment advisors advise where MF will invest but will not act as a distributor. Their job is just to advise. After that its investors are selective but the operator makes sure that the investor invests in the consolidated funds.

Division of tasks

Apart from this, the primary focus of the fundraiser is the shared budget. While an MF job, the mentor includes a variety of other activities.

Helping an investor change his or her portfolio

Record keeping

Assessing risk dynamics

Choosing the right investment

Direct system vs Standard system

The Mutual Fund Distributor will provide investors with a standard plan and ask them to invest the same amount. However, Investment Advisers advise investors to invest in specific programs. In the past MF had to be bought under the guidance of distributors, there was no other alternative. However, in January 2013, SEBI instructed AMCs to launch specific joint venture financing programs. This enables advisors to not only advise investors but also to help them invest in specific MF programs. Specific programs have a higher cost savings ratio than standard plans. So while distributors may be interested in the general plans of their commissions, advisers will not.

Take a look at their level of data collection

Recognizing the need for general information about your financial profile is the foundation of good financial planning. It is therefore necessary to ensure that the person you trust financially, is interested in asking important questions. As with your goals, income, expenses, long-term and short-term goals, assets, liabilities, tax status etc. They should also offer needs-based programs to meet your financial goals, rather than get product-based advice. While MFD may discuss your needs with products sent for marketing. A financial advisor is expected to provide fair advice to suit your needs.

Discussing risks and rewards

This is often discussed with an adviser in a better way than an Investment Adviser. You will discuss the dangerous features of MF I.e high, low, moderation etc. He will then look at the effectiveness of the MF scheme over the years. After that it will suggest that you invest in the program. The investment adviser will ask the operator to facilitate the investor's investment in planning the specific MF program they are looking for just to meet their financial needs. A counselor may be more interested in assessing your risk wishing. Also, setting the right expectations with concern for investment returns.

The conclusion

It is very difficult to say whether a co-fund distributor is needed or a consultant. Both are an important source of good investment in co-operative funds. From the point of view of MF regulation - all people, including companies, who receive AMFI (ARN) certification numbers, are distributors of shared funds, from top to bottom. In the process of distributing MF schemes for different AMCs, they need advice in many ways - scheme selection, asset allocation, tax planning etc. So all investors' choice is whether you want to directly contact the distributor or seek joint financial advice.

'Invest today - Enjoy the future'!