Financial Services Offered by Mutual Fund Distributors

Financial Services Offered by Mutual Fund Distributors

Are you looking to invest in mutual funds but don’t know where to start? Mutual Fund Distributors can help you navigate the complexities of mutual funds by providing a comprehensive range of services. 

This article will help you explore various financial services provided by Mutual Fund Distributors. We'll also help you understand how they earn commissions.

Mutual Fund Distributors:

Mutual Fund Distributors (MFDs) are mediators between investors and mutual fund companies, facilitating efficient sale and distribution of mutual fund schemes. 

Financial Services Offered by Mutual Fund Distributors:

1. Investment Advice -

Providing comprehensive investment advice is one of the primary services offered by mutual fund distributors. To recommend suitable mutual fund products to clients, MFDs assess their client’s financial goals, risk tolerance, and preferences. Such personalised services help investors diversify their portfolios and manage their finances.

2. Fund Transactions -

As said earlier, Mutual Fund Distributors facilitate the sale and purchase of mutual fund units between mutual fund companies and investors. They streamline the process by assisting their clients in completing all the paperwork, physically or digitally, while complying with all regulations. Thus, investing in mutual funds becomes very efficient for investors. 

3. Portfolio Management -

Another important service that MFDs provide is efficient portfolio management. They actively track, monitor, and adjust their client’s portfolios to help mitigate the risks associated with market fluctuations. This service involves rebalancing asset allocations, strategising investment plans, and calculating required funds to stay aligned with the goals of an investor.

4. Post-Investment Assistance -

After clients make their initial investment, Mutual Fund Distributors ensure they receive post-investment assistance service. It involves answering clients’ queries, addressing any concerns, and updating them about the performance of their mutual fund investments. Thus, MFDs become a dependable point of contact for investors. 

5. Educating Investors - 

Another major responsibility of MFDs is to educate their clients about every aspect of mutual funds and how it can be beneficial for their financial health. This involves explaining different kinds of mutual fund options, associated risks, and potential returns. Equipped with updated and required information, investors can make informed investment decisions.

Mutual Fund Distributors Commission Explained 

Types of Commissions -

1. Upfront Commissions:

This type of commission was traditionally paid to MFDs when investors bought or sold mutual fund units via them. These transactions are also known as Front-end Load. 

Note: Upfront commissions are no longer applicable.

2. Trail Commissions:

This type of commission is now mandated by the Securities and Exchange Board of Securities (SEBI). It is based on the Asset Under Management (AUM) model, where the MFD receives a percentage of the total assets managed by them. 

MFDs continue receiving these commissions until investors trade in mutual funds via them. 

Concluding Thoughts 

It is crucial for you to define your investment objectives before starting your mutual fund distributor search. It will help you understand what kind of services would be suitable for you, thus narrowing the list of MFDs to choose from. 

If you are someone looking to invest in mutual funds, you could also consider opting for a full-service stock broker like Choice. Choice is one of the reputed full-service stock brokerage firms in India with more than 30 years of experience in the finance industry. Their professional team provides a range of financial services to meet diverse investment needs. 

Connect with Choice today and start your mutual fund investment journey!

Disclaimer: Please note that while this article aims to provide accurate and up-to-date information, it should not be considered official financial advice. It is advisable to always consult a financial advisor before making investment decisions.