Information on anything and everything is available right at your fingertips. In the age of information technology, we investors have the chance to access and gain knowledge about various mutual fund plans, their returns, etc. . And all this information is available for free.
It is no different for those who provide financial services. There would be a multitude of emails, messages and websites hogging up to provide information.
Many mutual fund distributors will approach you to solicit mutual fund investments in new and existing mutual funds. Especially now, as the economy is coming back from its recession and the markets are turning favorable for investment.
While most of the information sent to us is already available on the World Wide Web. We can easily see information about a fund on the AMC (Asset Management Company) website. Yet, for some investors, this can be a valuable service.
These mailers and messages keep us updated on new launches, feedback from various plans, their NAV (Net Asset Value) and many other related pros and cons. But is that all we need to know about investing?
Don't you think it would be wise to choose the best mutual fund distributor who can help you manage your investments? What if all of this information only added to your confusion?
With the name changes of many mutual fund plans and portfolio realignments, most investors are unsure of what to do with their mutual fund holdings.
It may be a good idea to work with a mutual fund distributor 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 plenty of other things you need to look out for.
1. Qualification of the mutual fund distributor
The Association of Mutual Funds in India (AMFI) requires those engaged in the mutual fund advisory service to hold a certification issued by the National Institute of Securities Management (NISM).
But relying on certification is not enough as it would require a little more research into the philosophy (attitude and rationalization) and research process that the mutual fund distributor and their team adopt while advising clients. Also, you need to make sure that the distributor is not someone peddling investments as a side business. Remember that acting on the advice of an unqualified mutual fund distributor could be a disaster for your money and your investments.
2. Expertise of the mutual fund distributor
Check out the expertise of the mutual fund distributor and their team. Check how well qualified they are in terms of education and what kind of knowledge and experience they have.
Also check if the distributor has a good knowledge of all asset classes. Such as equity, debt, fixed income, gold, etc.
They should be able to understand and decipher how these asset classes would be affected by various national and international events, decisions or trend changes related to oil price interest rates, etc.
Understanding mutual funds, identifying their suit for you and your investment portfolio, balancing asset allocation, and knowing how asset changes will affect you requires a high degree of expertise.
Therefore, you need to check the skill level of the Distributor and the type of experience they have. The mutual fund should be able to identify products that will meet your life demands as and when you need them.
The mutual fund distributor you choose should be easily reachable. Whether by email, phone or meeting in person within a reasonable time. It is important that the ATM, to whom you have entrusted your money, is accessible as and when you need it. The distributor or the team should be able to clarify your doubts within a reasonable time.
Is this distributor able to complete the transactions for you on time? Timing is of critical importance in the world of investing in the best mutual funds and stocks. The ATM should be able to complete your trades within a short period of time. As quickly as possible.
All of these things matter when your hard earned money is involved.
4. Provide comprehensive financial solutions
We Indians don't like to discuss our finances or our financial situation with everyone. Because we've been taught not to reveal our finances and investments to too many people. We have been taught to keep these things and details confidential and secret.
It would therefore be better to find a distributor who is a single solution for all our financial needs. An advisor who can better understand and manage our investments in complete confidentiality. An impartial objective. Whoever would be able to offer us mutual fund products from all the fund houses. Not just one or two fund houses.
5. Does the distributor ask 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 move the investment forward, accordingly.
Are you asking questions to better understand your financial needs, your situation and your goals? Or are you only given product details to convince you to buy a product and not the solution you are actually looking for?
Without asking yourself any questions, how could anyone know for sure which particular plan is best for you? Can you take the risk of investing in small cap companies or should your investments be limited to debt mutual funds? Whether you have one or two life and health insurance or not? Both of these are essential before you start investing in mutual funds. To secure our loved ones.
Not only helping investors, but all of this information was also gathered from them and other investors across the country and submitted to the fund houses. With this collected data, the fund houses, as well as the government, are able to better understand the moods and inclinations of the investor. It also helps them come up with new policies and policy changes. Design new strategies. Develop and propose new attractive plans.
6. Infrastructure and value-added services
Apart from evaluating his qualifications and attitude towards customers, you should also judge whether he has the right infrastructure in place. Would you be able to receive sound advice at all times? Remember that entering an investment is just the start. You want your investments to be tracked and monitored regularly. The change must be notified quickly if an investment has become redundant or non-performing.
Therefore, you should ideally have various tools and calculators for online tracking of your investments as added value.
In addition, the mutual fund distributor should send regular updates on your portfolio. What are all the changes that can be made based on changing market conditions and financial goals? What any new development has been done in the field of mutual funds? What new plans have arisen? What new policies have been developed that will benefit you or vice versa?
7. What type of after-sales support is provided?
As stated earlier, concluding an investment is just a starting point. It is only with the help of careful and reliable after-sales support that we would be able to monitor, track and develop our investment portfolio. All tracking tools may not be so easily understood by every investor.
The reason for investing with a mutual fund distributor and not investing in direct mutual funds is that we are unfamiliar and comfortable with the market. All of the reports that fund houses send out periodically to investors are too full of jargon that we don't always understand. To interpret them we need the help of professionals. This help should be provided by the mutual fund distributor.
As and when you need it. Not as and when it suits them.
Well, if you were offered this, you would be able to rate the quality of the advice. You should cross-check the data provided by him / her with some of his / her clients to verify the references. The best way is to ask for references.
Use social media, to find out if anyone has recommended the advisor or their firm. Check online for any references, ask your friends or relatives, if they know of any references. What kind of knowledge and experience are associated? This way you can get a feel for its strengths and weaknesses.
Check how long the advisor has been in business and how they operate. Research what area 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 be experienced and, therefore, preferred.
This exercise would not only help you understand its performance track record, but also determine whether or not fast and reliable after-sales service is provided.
There is no official rating or ranking system for mutual fund distributors in India, at this time. So we have to fend for ourselves.
A mutual fund distributor is in this business to earn. Whether it is an individual, a partnership or a business, it could not survive for long if it is not compensated.
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 planners and financial advisers might charge a fee for the same. Write a comprehensive financial plan, taking into account risk appetite, future demands, and life goals. You are asked to pay them fees on a regular basis. It's just that they don't tell you that they also earn a commission on any investments they make on your behalf.
Whether a mutual fund distributor is being honest with you or not, this is the crucial criterion to check.
Today, with so many options available for investing, the task of carefully planning investments has become quite difficult. Because we are surrounded by so much information about each of these options, such as stocks, mutual funds, bank FDs, MNTs, corporate bonds, public provident funds ( PPF), National Savings Certificate (NSC), etc.
And, always, at the end of all the research and evaluation, we keep asking ourselves if we made the right investment decision.
In order for us to eliminate this chaos caused by "information overload", it is necessary to find a mutual fund distributor who provides independent and impartial financial advice. Without interest (from commissions). The one who will help, assist and guide you in prudent investment planning.
This is what the best mutual fund distributor will do for you. That is what the vision and purpose of WealthBucket is.