Information on anything and everything is available at your fingertips. In this age of information technology, investors are fortunate to access and gain insight into various mutual fund schemes, their returns, etc. And all this information can be accessed for free.
It is no different for those who provide financial services, either. There would be a lot of emails, messages and websites hoarding to provide information.
Many mutual fund dealers will approach you to request mutual fund investments in new and existing mutual funds. Especially now, as the economy is coming back from its recession and markets are turning investment friendly.
Although most of the information that is sent to us is already on the Internet. We can easily view information about a fund on the AMC (Asset Management Company) website. Still, for some investors, it can be a valuable service.
These mailers and messages keep us updated on the new releases, returns of various schemes, their NAV (Net Asset Value) and many other advantages and disadvantages related to them. But is that all we need to know about investing?
Don’t you think it would be tricky to choose the Best Mutual Fund Distributor who can help you manage your investments? What if all this information only adds to your confusion?
With the name changes of many mutual fund schemes and portfolio reshuffles, most investors are confused about what to do with their mutual fund holdings.
It may make sense to work with a mutual fund dealer who can advise and guide you in your investment decisions.
Returns alone are not a sufficient basis for selecting the right mutual fund distributor. There are many other things to look for.
1. Qualification of the Mutual Fund Distributor
The Association of Mutual Funds of India (AMFI) requires that persons engaged in the mutual fund advisory service have a certification issued by the National Institute of Securities Management (NISM).
But simply relying on certification is not enough, as you would need to do a little more research into the philosophy (attitude and rationalization) and research process that the mutual fund distributor and his team adopt when advising clients. Also, you need to make sure that the dealer is not an individual selling investments as a side business. Remember, following the advice of a mutual fund distributor who does not have the necessary knowledge could spell disaster for your money and investments.
2. Mutual fund dealer experience
Check out the experience of the mutual fund dealer and their team. Check how well qualified they are in terms of education and what kind of knowledge and experience they have.
Also, find out if the dealer has a good understanding of the full range of asset classes. Such as stocks, debt, fixed income, gold, etc.
They must be able to understand and decipher how these asset classes would be affected by various events, decisions or changes in national and international trends related to oil prices, interest rates, etc.
Understanding mutual funds, identifying their suitability for you and your investment portfolio, balancing your asset allocation, and knowing how changes in assets will affect you requires a high degree of expertise.
So you need to check how skilled the dealer is and what kind of experience they have. The mutual fund must be able to identify products that meet your life’s requirements when and when they are needed.
3. Accessibility
The mutual fund distributor you choose should be easily contactable. Either by email, phone or by meeting in person within a reasonable period of time. It is important that the dealer, to whom you have entrusted your money, is accessible when you need it. The dealer or the team should be able to answer your questions within a reasonable time.
Can this dealer execute the transactions for you on time? Time is of the essence in the world of investing in best mutual funds and stocks. The dealer should be able to execute his transactions in no time. As fast as possible.
All of these things matter when it comes to your hard earned money.
4.Provide complete financial solutions
We Indians do not like to talk about our finances or financial status with each and everyone. Because we have been taught not to disclose our finances and investments to too many people. We have been taught to keep such things and details confidential and secret.
Therefore, it would be preferable to find a dealer that is a comprehensive solution for all of our financial needs. An advisor who can understand and manage our investments better and with confidentiality. An impartial one. One that could offer us mutual fund products from all fund houses. Not just one or two fund houses.
5. Is the dealer asking questions?
This is the only attribute that will tell you if a mutual fund distributor is only interested in selling or if they are genuinely interested in understanding your requirements and needs. And then advance the investment accordingly.
Are you asking questions to better understand your financial needs, situations, and goals? Or are they just giving you product details to convince you to buy a product and not the solution you are really looking for?
Without asking you questions, how could anyone know for sure which particular plan is right for you? Can you take the risk of investing in small-cap companies, or should your investments be limited to debt mutual funds? Do you have one or two life and health insurance or not? These two are the quintessential before getting started with mutual funds. To protect our loved ones.
Not only helping investors, but all of this information was also collected from them and other investors across the country and sent to fund houses. With this collected data, fund houses, as well as the government, can better understand investors’ moods and inclinations. It also helps them come up with new policies and policy changes. Currency new strategies. Develop and propose new and attractive plans.
6. Infrastructure and value-added services
In addition to evaluating your ratings and attitude towards customers, you also need to judge whether you have the proper infrastructure set up. Could you receive prudent advice on an ongoing basis? Remember that entering an investment is only the beginning. You want your investments to be monitored and tracked regularly. The change must be notified immediately if an investment has become redundant or is not working.
Ideally, therefore, you should be provided with various tools and calculators for online tracking of your investments, as an added value.
In addition, the mutual fund distributor should send regular updates on its portfolio. What changes can be made according to changes in market conditions and financial objectives? What developments have been made in the field of mutual funds? What new plans have emerged? What new policies have been devised that will benefit you or vice versa?
7. What kind of after-sales support is offered?
As stated earlier, making an investment is simply a starting point. Only with the help of prudent and reliable after-sales support, we would be able to monitor, track and promote our investment portfolio. All monitoring tools may not be so easily understood by all investors.
The reason for investing with a mutual fund dealer and not investing in direct mutual funds is because we are not familiar or comfortable with the market. All the reports that fund houses regularly send to investors are too full of jargon that we do not always understand. To interpret them, we need the help of professionals. This help must be provided by the mutual fund dealer.
As and when you need it. Not as and when it is convenient for them.
8. Past history
Well, if you are offered this, you will be able to assess the quality of the advice. You should verify the data provided by him / her with some of his / her clients as a reference check. The best way is to ask for references.
Use social media to find out if someone has recommended the advisor or your company. Check online for references, ask your friends or family if they know of any references. What kind of knowledge and experience is associated with? This way you can get an idea of your strengths and weaknesses.
Inspect how long the advisor has been in business and how they operate. Find out what field the mutual fund distributor was working in and what knowledge he / she and the team have. Someone who has been through multiple market cycles would have experience and therefore would be preferred.
This exercise will not only help you understand your past performance history, but it will also help you recognize whether or not fast and reliable after-sales service is provided.
There is no formal rating or rating system for mutual fund dealers in India, for now. So we have to figure it out on our own.
9. Compensation
A mutual fund dealer is in this business to make money. Whether it is an individual, a society or a company, it could not survive for long without compensation.
Maintaining a website, helping you make a financial plan, collecting data on your behalf, keeping it free for you, and keeping all of these services alive takes effort and money.
Many financial planners and advisers may charge a fee for the same. Write a comprehensive financial plan, taking into account risk appetite, future requirements, and life goals. You are asked to pay them a fee regularly. What they don’t tell you is that they also receive a commission for all the investments they make on your behalf.
Whether or not a mutual fund distributor is honest with you, this is the crucial criteria to check.
Bottom line
Today, with so many investment options available, the task of prudent investment planning has become quite difficult. Because we are surrounded by so much information about each of these options, such as stocks, mutual funds, bank FDs, NCDs, corporate bonds, Public Provident Funds (PPF), National Savings Certificate (NSC), etc.
And yet, at the end of all the research and evaluation, we still wonder if we made the right investment decision.
Why?
In order for us to eliminate this chaos caused by “information overload”, what is required is to find a mutual fund distributor who provides independent and impartial financial advice. No vested interests (of commissions). The one who would help, assist and guide you through prudent investment planning.
Here’s what the best Mutual Fund Distributor will do for you. This is the vision and goal of WealthBucket.