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Information on anything and everything is available at our fingertips. In this era of information technology, we investors are privileged to access and gain knowledge about various mutual fund schemes, their returns etc. And all this information can be obtained for free.
It is no different for those providing financial services. There will be lots of emails, messages and websites to provide information.
Many mutual fund distributors will contact you seeking mutual fund investments in new and existing mutual funds. Especially now, as the economy is recovering from its slump and the markets are turning investment friendly.
While most of the information sent to us is already on the World Wide Web. We can easily check the information about any fund from the website of the AMC (Asset Management Company). Still, for some investors, it can be a valuable service.
These mailers and messages keep us updated about new launches, returns of various schemes, their NAV (Net Asset Value) and many other pros and cons associated with them. But what do we need to know about investing?
Don’t you think it would be prudent to choose the best mutual fund distributor who can help you manage your investments? What if all this information is only increasing your confusion?
With the name change and portfolio restructuring of many mutual fund schemes, most investors get confused as to what they should do with their mutual fund holdings.
It may make sense to work with a mutual fund distributor who can advise and guide you on your investment decisions.
Returns alone are not enough to choose the right mutual fund distributor. There are many more things that you need to find.
1. Qualification of Mutual Fund Distributor
The Association of Mutual Funds in India (AMFI) mandates that persons engaged in providing mutual fund advisory services have a certification issued by the National Institute of Securities Management (NISM).
But just relying on certification is not enough as you would need to dig a bit more into the philosophy (approach and rationalization) and research process that the Mutual Fund Distributor and his team follow while advising the clients. Also, you need to be sure that the distributor is not someone who sells investments as a side-business. Remember, acting on the advice given by a mutual fund distributor who does not have the requisite knowledge can spell disaster for your money and investments.
2. Specialization of Mutual Fund Distributor
Check the expertise of the mutual fund distributor and his team. Check how qualified they are in terms of education and what kind of knowledge and experience they have.
Also see if the distributor has a good knowledge of different types of asset classes. Like Equity, Debt, Fixed Income, Gold etc.
They should be able to understand and understand how these asset classes will be affected by various domestic, international events, decisions or changes in trends related to oil prices, interest rates, etc.
Understanding mutual funds, identifying their suitability for you and your investment portfolio, balancing asset allocation and knowing how asset changes will affect you requires a high level of expertise.
Therefore, you must check how efficient the distributor is and what kind of experience he has. Mutual funds should be able to identify the products that will meet your life needs as and when they are needed.
3. Accessibility
The Mutual Fund distributor chosen by you should be easily contactable. whether by email, by phone, or by meeting in person within a reasonable period of time. It is important that the distributor to whom you have entrusted your money is available as per your requirement. The distributor or team should be able to clear your doubts within a reasonable period of time.
Is this dealer able to execute transactions for you on time? Timing is of great importance in the world of investing in best mutual funds and stocks. The distributor should be able to execute your transaction in less time. as fast as possible.
All these things matter when your hard earned money is involved.
4. Provide complete financial solution
We Indians do not like to discuss our finances or financial status with everyone. Because we have been taught not to reveal our finances and investments to too many people. We have been taught to keep such things and details confidential and confidential.
Hence it would be better to find a distributor who is a one-stop solution for all our financial needs. An advisor who can understand and handle our investments optimally and with confidentiality. a fair. One that will enable us to offer mutual fund products from all the fund houses. Not just one or two fund houses.
5. Is the distributor asking questions?
This is one feature that will tell you whether a mutual fund distributor is only interested in selling or he is really interested in understanding your needs and requirements. And then proceed with the investment accordingly.
Is he/she asking you questions to better understand your financial needs, situation and goals? Or are you just being given details about products to persuade you to buy the product and not the solution you are actually looking for?
Without asking you any questions, how would anyone know for sure which particular plan is the best fit for you? Can you take the risk of investing in small-caps or should your investments be limited to debt mutual funds? Do you have a life and health insurance or not? These two are excellent before starting mutual fund investing. To secure our loved ones.
Not only helped the investors but all this information was also collected from them and other investors across the country and submitted to the fund houses. With this data collected, the fund houses, as well as the government, are able to better understand investor mood and inclination. It also helps them in bringing new policies and policy changes. Create new strategies. Develop and come up with new and attractive plans.
6. Infrastructure and Value Added Services
Apart from assessing their competency and attitude towards customers, you also need to decide whether they have the right infrastructure set up. Will you be able to consistently get sensible advice? Remember entering into an investment is just the beginning. You want your investments to be monitored and tracked regularly. If any investment has become redundant or non-performing, a change should be advised immediately.
Therefore, you should ideally be provided with various tools and calculators for online tracking of your investments in the form of value addition.
In addition, the mutual fund distributor should send regular updates on your portfolio. What all changes can be made as per the change in market conditions and financial goals? What are the new developments in the field of mutual funds? What new schemes have come? What new policies have been formulated that will benefit you or vice versa?
7. What kind of after sales support is provided?
As stated earlier getting into investing is just a starting point. Only with the help of a prudent and reliable after-sales support, we will be able to monitor, track and further our investment portfolio. Not all tracking tools may be so easy to understand for every investor.
The reason for investing with a mutual fund distributor and not investing in direct mutual funds is because we are not familiar and comfortable with the market. All the reports sent from time to time by the fund houses to the investors are full of jargon which we do not always understand. To interpret them, we need the help of professionals. This assistance should be provided by the Mutual Fund Distributor.
when you need it. Not as and when it is convenient for them.
8. Past Track Record
Well, you will be able to assess the quality of advice, if it is offered to you. You need to cross-check the data provided by him with some of his clients as a reference check. The best way is to ask around for referrals.
Use social media to find out if anyone has recommended the advisor or his or her firm. Check online for any referrals, ask your friends or relatives if they know of any references. What kind of knowledge and experience is involved? This way you can get an idea about his strengths and weaknesses.
Observe how long the advisor has been in business and how it operates. Find out in which sector the mutual fund distributor was working and what knowledge does he and his team have. Someone who has been through several market cycles will be experienced and hence preferred.
This exercise will not only help you understand its past performance track record but will also help you identify whether prompt and reliable after sales service is provided or not.
Currently, there is no formal rating or ranking system for mutual fund distributors in India. So we have to work it out on our own.
9. Compensation
A Mutual Fund Distributor is in this business to earn. Whether it is an individual, a partnership or a company, if it is not compensated it will not be able to survive for long.
Maintaining a website, helping you with a financial plan, collecting data on your behalf, keeping it free for you and keeping all these services alive requires effort and money.
Many financial planners and advisors may charge a fee for this. Prepare a comprehensive financial plan keeping in mind the risk appetite, future needs and life goals. You are asked to pay the fee to them regularly. It’s just that what they don’t tell you is that they also get a commission on all the investments made on your behalf.
This is one of the important criteria to check whether the Mutual Fund Distributor is honest with you or not.
ground level
With so many options available for investment today, the task of making a judicious investment plan has become quite difficult. Because we are surrounded by a lot of information about each and every option like Stocks, Mutual Funds, Bank FDs, NCDs, Corporate Bonds, Public Provident Fund (PPF), National Savings Certificate (NSC) etc.
And, yet, at the end of all the research and evaluation, we keep wondering whether we made the right investment decision.
Why?
For us to be able to overcome this chaos caused by “information overload”, it is essential to get hold of a mutual fund distributor who provides independent and unbiased financial advice. Without any vested interest (commission). The one who will help, assist and guide you through prudent investment planning.
This will be done by the best mutual fund distributor for you. This is the vision and mission of Wealthbucket.
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