Working as a Mutual Fund agent for selling Equity and Debt instruments also have scope for generating good amount of commission. Since the percentage of commission has been decreased the volume of transactions should be higher.
Earning of a Mutual Fund Agent
There
are 3 components of commissions earned by Mutual Funds Agents
1) Commission from Client
This is the commission which customer pays to the agents for their
service. It generally ranges from .5% - 2% . It should depend on the
quality of advice your agent provides. This is the commission you will
pay to agent every time you do the investment. After the abolision of
entry loads, client has to compensate the agents directly.
2)
Upfront Commission
Upfront commission is the commission paid by AMC (mutual funds company)
to agent in the first year. The commission varies from one AMC to
another and varies across different categories of mutual funds. Equity
Mutual funds generally give higher upfront commissions,whereas debt
funds give lower commissions.
3)
Trail Commission
This commission is mostly hidden from general public. This is most
important part of commissions and main earning of mutual funds agents in
long run. Trail commission is the commission paid to agents by AMC in
subsequent years. The most important point you should know is that trail
commission is percentage of total AUM (total worth of customer).
AMFI Registration
To work as Mutual Fund agent the person should be registered with AMFI. The details are:
AMFI introduced the process to register the intermediaries who have passed the certification test as AMFI Registered Mutual Fund Advisors (ARMFA), thus laying the foundation for an organized industry and allotting a unique code-AMFI Registration Number (ARN) alongwith an identity card. SEBI recognizing the importance of this initiative taken by AMFI had made Registration with AMFI after passing AMFI Certification Test compulsory for intermediaries.
SEBI has clarified that after obtaining certification as per changed
mandate, the requirement of registration with AMFI in terms of its
circular dated November 28, 2002 would continue.
As such, all AMFI/ NISM Certified Intermediaries engaged in
marketing and selling of Mutual Fund schemes are required to be
registered with AMFI after passing AMFI/ NISM Certification Test. The
Mutual Funds will not be able to deal with intermediaries who are not
registered with AMFI and obtained ARN.
EMPLOYEES OF CORPORATE (NON-INDIVIDUAL) ARMFA In terms above mentioned notification and SEBI circular, employees of Corporate (non-individual) ARN holders who are engaged in marketing of Mutual Funds Products, are also required to pass test and register with AMFI, under ARN of the corporate. AMFI Registration Number (ARN) : SALIENT FEATURES The AMFI Registration Number (ARN) has been introduced as the unique code, which identifies the intermediary as ARMFA.
ARN is a
unique number allotted to:
A photo identity card indicating the validity period of ARN, would be issued to persons applying for allotment of ARN, after passing the AMFI/ NISM test.
Corporates would be issued Certificate of Registration indicating validity period of ARN. The application for registration of corporate bodies should compulsorily be accompanied by the application for registration of corporate employee.
Passing certificate issued by National Institute of Securities Market (NISM) in respect of 'NISM - Series V-A : Mutual Fund Distribution Examination' has validity period of three years. Accordingly, ARN issued against such certificates as well as renewed ARN on or after June 1, 2010 shall have validity period of three years. In case of corporate entities validity period for Certificate of Registration issued is 3 years.
No distributor shall hold more than one ARN card/ Certificate of Registration
After obtaining ARN, the intermediaries should approach the AMCs for empanelment and they can canvass Mutual Fund business of the respective AMCs only after empanelling with them.
Registered intermediaries can be de-registered as the ultimate censure, for the following reasons:
AMFI Guidelines & Norms for Intermediaries ("AGNI")
In order to promote best practices and ethical standards in the business
of sale of Mutual Fund schemes, AMFI has formulated broad guidelines and
norms including a code of conduct for the intermediaries, which will be
applicable to ARMFA.
AMFI believes that a sincere endeavor to adhere to the guidelines and
the code would help promote best and healthy practices in the area of
sales and marketing which would ultimately benefit all concerned - the
investor, the intermediary and the industry as a whole.