Registered Mutual Fund Distributors who are qualified to sell MFs, are called by following 4 different names:-
- Banks: Banks offer advisory and products services to the investors. Most banks do not charge fees.
- Plain MF Agent: These agents help in just investing in MFs and most do not advise. Though they do not charge advisory fees, they charge a nominal transaction fee to cover their minimum costs. Their main source of revenue is from MF directly.
When investors invest, the fund house deducts a nominal fee already fixed from the investors investment amount out of the amount invested. - SEBI-Registered Advisers: These advisers have to function as per strict SEBI guidelines, complying with the mandatory requirements. The most important requirement is that they should segregate her advisory business from their distribution business.
- Financial Planners: These financial planners are qualified & certified financial planners. There are around 50000 registered distributors and independent financial planners in India (in 2013).
Financial planners who make a holistic financial plan, charge an advisory fee. Besides, they also guide through the process of adhering to the plan and evaluate once a year or two. These financial planners understand the financial goals, gets details of income and expenditure, medical needs of the prospective investors and then devise the financial plan.