For a country like India with a huge population, the number of active mutual fund distributors are just 60,000. In comparison, the insurance industry has 22 lakh agents, including LIC agents.
It is estimated that the mutual fund industry has 1 MFD to cater to 17,000 people. While the industry is seeing the entry of a lot of online/robo advisory platforms, the addition of new individual MFDs is not to write home about. The industry has added 4,201 new distributors in the individual category this fiscal year till February 2021, shows data from Association of Mutual Funds in India.
Asset management firms and national distributors have been enrolling new distributors to expand their distribution force on their own. But there was no industry wide collaborative effort to attract new MFDs and guide them till they become self-sustainable. A new initiative from Centre for Investment Education and Learning, or CIEL, eight asset management firms and National Stock Exchange plans to fill this lacuna. These eight AMCs include Aditya Birla Sun Life, Axis, ICICI Prudential, L&T, Nippon India, SBI, Sundaram and UTI.
One has to register on expertmfd.com to become a mutual fund distributor. It is a 360-degree MF ready platform which provides end to end services of on boarding, training, and scaling up the business of new distributors. CIEL is looking at enrolling insurance agents, Chartered Accountants, retired bankers, fresh graduates and even the existing inactive distributors. It aims to enrol 50,000 new distributors in the next three years.
“There is a huge gap between industry requirements and the skills sets of new distributors. Investors in smaller towns are stuck with product that have low transparency, illiquid and not suited to their investment goals. Mutual fund products address a lot of these issues. We need more distributors to handhold and guide people towards the right products. For this, we need many new distributors. However, the first two years are crucial for new distributors. We will give them training and support to sustain and grow their business,” said Himanshu Vyapak, Managing Director, CIEL.
Steps to become a distributor:
- Register on the ExpertMFD Portal
- Enter mandatory profile details and upload correct documents
- Take FEAT (Financial Entrepreneurship Assessment Test)
- Pass the NISM VA Mutual Fund Distributors Certification Examination
- Submit your KYD and apply for an ARN
- Undertake empanelment with AMC partners
Distributors have to cough up Rs 2,500 to enrol, which covers the NSE MF II platform fee and training fee. It has been offered at a subsidised rate to attract new distributors in the industry.
India’s mutual fund penetration stands at 12% of GDP, distantly low in comparison to developed markets such as the U.S where it is more than 100%.
The industry’s asset base has grown from Rs 22.20 lakh crore in February 2018 to Rs 32.29 lakh crore in February 2021. But industry experts say that the number of unique investors in mutual funds has not grown at the same pace. While the industry has 9.62 crore folios, unique folios are estimated to be around 2 crore, since each investor holds multiple folios.
