How Will Incentives Get After Passing the NISM Mutual Fund Exam Getting EUIN?
Passing the NISM (National Institute of Securities Markets) Mutual Fund exam and obtaining the Employee Unique Identification Number (EUIN) often opens the door to a plethora of incentives and benefits as a mutual fund distributor or advisor. In this guide, we will explore what these incentives might include, along with the differences between direct business with asset management companies (AMCs) and working through national distributors (NJs).
Key Incentives for Mutual Fund Distributors
Upon obtaining an EUIN, distributors are typically entitled to a range of incentives and benefits. Here’s a detailed overview of the key incentives:
1. Commissions
Distributors earn commission on the mutual funds they sell. The amount of commission can vary based on the type of mutual fund and the amount invested. This is a quick and direct incentive for driving sales and increasing client investments.
2. Trail Fees
Additional to upfront commissions, distributors often receive trail fees, which are ongoing payments based on the assets under management (AUM) for the mutual funds they sold. This creates a continuous income stream as long as the clients remain invested, providing a steady source of revenue.
3. Performance Incentives
Some asset management companies (AMCs) offer performance-based incentives for achieving specific sales targets or maintaining a high level of client satisfaction. This not only motivates better performance but also ensures client loyalty.
4. Training and Support
Many AMCs provide training programs, marketing support, and resources to enhance the skills of distributors and grow their businesses. This assistance is crucial in staying updated with market trends and optimizing sales strategies.
5. Networking Opportunities
Obtaining an EUIN can lead to networking opportunities with other professionals in the financial services industry. These connections can lead to potential partnerships and referrals, expanding your client base and business opportunities.
6. Regulatory Compliance
Holding an EUIN signifies that you are recognized and compliant with the regulatory requirements set by the Securities and Exchange Board of India (SEBI). This can enhance your credibility with clients and build trust in the market.
7. Recognition Programs
Some AMCs have recognition programs that reward top-performing distributors with awards, bonuses, or exclusive events. These programs not only motivate but also encourage distributors to continuously improve their performance and client service.
Deciding Between Direct Business with AMCs and Working Through National Distributors
After passing the NISM certification, you have the option to either do business directly with AMCs or work through national distributors (NJs). Both models come with their own set of advantages and disadvantages. Here’s a breakdown of the models:
Working Directly with AMCs
If you choose to do business directly with AMCs, you will need to enroll with the AMCs with whom you wish to work. It is advisable to start with a few AMCs and build your business gradually. The brokerage earned from your business is passed on to your bank account on a monthly basis. Each AMC will have its own brokerage account, so you will receive payments separately for each one.
Working Through National Distributors (NJs)
If you decide to work through national distributors (NJs), they will keep a portion of your earnings in exchange for their services, such as marketing support and platform empanelment. However, you will receive a consolidated brokerage for all your business done through the NJ, after deducting their share.
The choice between these two models depends on your goals, risk tolerance, and market understanding. Both approaches can be effective, and it might be beneficial to consider both options to determine which aligns best with your business strategy.
In conclusion, the incentives and benefits for mutual fund distributors can vary significantly between different asset management companies. It is advisable to check with specific AMCs for detailed information on their incentive structures, as well as to consider whether direct business or working through national distributors is the best fit for your goals and business model.