{"id":4528,"date":"2021-09-15T13:15:17","date_gmt":"2021-09-15T07:45:17","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=4528"},"modified":"2022-05-24T19:16:10","modified_gmt":"2022-05-24T13:46:10","slug":"mutual-fund-advisor","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/","title":{"rendered":"Mutual Fund Advisor\u2019s Role and Responsibilities \u2013 All You Need To Know"},"content":{"rendered":"\n<p>Investing directly in the <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a> markets is not everyone\u2019s cup of tea. Direct equity investing requires fundamental knowledge of the market as well as company financials. One should have enough time to analyze companies, industries, and factors that affect stock performance in the market. If this seems tedious, one may opt to <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-prioritise-investing\/\">invest<\/a> in <a href=\"https:\/\/www.tickertape.in\/blog\/mutual-funds\/\">mutual funds<\/a> through mutual fund advisors.<\/p>\n\n\n\n<p>There are various types of <a href=\"https:\/\/www.tickertape.in\/blog\/mutual-funds\/?utm_source=blog&amp;utm_medium=article\">mutual funds<\/a> that cater to the varying needs of investors. The industry is constantly striving to launch newer and innovative products every now and then to entice investors to put their money in them. Wading through the choices and selecting a mutual fund is not an easy task. Therefore, sometimes, one may need an expert to map out your profile and find the best-fit fund for your investment portfolio. That expert is the mutual fund advisor.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Mutual-funds-and-advisors\" title=\"Mutual funds and advisors\">Mutual funds and advisors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Role-of-mutual-fund-advisors\" title=\"Role of mutual fund advisors\">Role of mutual fund advisors<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Plan-investment\" title=\"Plan investment\">Plan investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Evaluate-risk-appetite\" title=\"Evaluate risk appetite\">Evaluate risk appetite<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Diversification-of-the-portfolio\" title=\"Diversification of the portfolio\">Diversification of the portfolio<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Portfolio-rebalancing\" title=\"Portfolio rebalancing\">Portfolio rebalancing<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Commission-structure-of-mutual-fund-advisor\" title=\"Commission structure of mutual fund advisor\">Commission structure of mutual fund advisor<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Payment-from-the-client\" title=\"Payment from the client\">Payment from the client<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Upfront-commission\" title=\"Upfront commission\">Upfront commission<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Trail-commission\" title=\"Trail commission\">Trail commission<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Regulations-by-SEBI-on-mutual-fund-advisors\" title=\"Regulations by SEBI on mutual fund advisors\">Regulations by SEBI on mutual fund advisors<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Segregation-of-distribution-activities\" title=\"Segregation of distribution activities\">Segregation of distribution activities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Implementation-services\" title=\"Implementation services\">Implementation services<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Agreement\" title=\"Agreement\">Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Fees\" title=\"Fees\">Fees<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Difference-between-a-mutual-fund-advisor-and-a-manager\" title=\"Difference between a mutual fund advisor and a manager\">Difference between a mutual fund advisor and a manager<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#SEBI-guidelines-for-mutual-fund-investors\" title=\"SEBI guidelines for mutual fund investors\">SEBI guidelines for mutual fund investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.tickertape.in\/blog\/mutual-fund-advisor\/#Bottom-line\" title=\"Bottom line\">Bottom line<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"and\"><span class=\"ez-toc-section\" id=\"Mutual-funds-and-advisors\"><\/span><strong>Mutual funds and advisors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mutual funds are a convenient form of investment, especially for salaried professionals who do not have time to track the markets every day. Furthermore, mutual fund advisors and institutions may guide you in making proper investment choices as per your financial goals. They help shortlist the best available choice of funds as per the investors\u2019 interest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"of\"><span class=\"ez-toc-section\" id=\"Role-of-mutual-fund-advisors\"><\/span><strong>Role of mutual fund advisors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Plan-investment\"><\/span><strong>Plan investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Keeping in mind the investor\u2019s capital, financial goals, and current financial situation, advisors may structure and plan investments accordingly, keeping the investors informed at every step.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Evaluate-risk-appetite\"><\/span><strong>Evaluate risk appetite<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Every investor brings with them different risk tolerance levels. So it becomes paramount for the investor to pick suitable funds that match their risk profile. Mutual fund advisors guide investors accordingly after a detailed risk profiling exercise.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Diversification-of-the-portfolio\"><\/span><strong>Diversification of the portfolio<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Further to analyzing the possible investment options, mutual fund advisors also help with optimal portfolio <a href=\"https:\/\/www.tickertape.in\/blog\/mitigating-portfolio-risk-through-diversification\/\">diversification<\/a>. Portfolio diversification is essential when it comes to minimizing the risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Portfolio-rebalancing\"><\/span><strong>Portfolio rebalancing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Mutual fund advisors may also help with tracking and assessing the portfolio for performance optimization and suggest rebalancing measures &#8211; switching out of a fund or setting up a <a href=\"https:\/\/www.tickertape.in\/blog\/choose-best-date-for-sip\/?utm_source=blog&amp;utm_medium=article\">Systematic Withdrawal Plan<\/a> or simply redeeming and reinvesting in another fund as per market conditions and the strategy of the investor.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"fund\"><span class=\"ez-toc-section\" id=\"Commission-structure-of-mutual-fund-advisor\"><\/span><strong>Commission structure of mutual fund advisor<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mutual fund advisors derive their payments through commissions too. It is important to understand their cost structures for appropriate planning.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment-from-the-client\"><\/span><strong>Payment from the client<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Most advisors charge their clients a fixed percentage of the investment amount. It is mutually decided and mostly ranges between 1% to 2% of the investment amount.<\/p>\n\n\n\n<p>For example, if an investor invests Rs 1,00,000 into a mutual fund scheme, and if the advisor\u2019s fee is 2% then, the advisor will get Rs 2,000 as charges.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Upfront-commission\"><\/span><strong>Upfront commission<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The advisors get this commission directly from the mutual fund company or the asset management company as payment towards pushing their products to potential investors. The commission amount is not fixed and varies from fund to fund. For instance, commission for <a href=\"https:\/\/www.tickertape.in\/blog\/6-factors-investing-in-equity-funds\/?utm_source=blog&amp;utm_medium=article\">equity funds<\/a> is higher as compared to <a href=\"https:\/\/www.tickertape.in\/blog\/what-are-debt-funds\/?utm_source=blog&amp;utm_medium=article\">debt funds<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Trail-commission\"><\/span><strong>Trail commission<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Trail commission is the primary source of income for most advisors. Under this scenario, the advisor gets a fixed annual commission on the entire asset under management. For example, if the advisor has 100 clients and a total of 1cr of assets under management. And, if the trail commission is 1%, then annually, the advisor will get Rs 1,00,000 as commission.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"by\"><span class=\"ez-toc-section\" id=\"Regulations-by-SEBI-on-mutual-fund-advisors\"><\/span><strong>Regulations by SEBI on mutual fund advisors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are some of the regulations framed by <a href=\"https:\/\/www.tickertape.in\/blog\/securities-and-exchange-board-of-india-functions-powers-and-regulations-of-sebi\/?utm_source=blog&amp;utm_medium=article\">SEBI<\/a> specifically for mutual fund advisors:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Segregation-of-distribution-activities\"><\/span><strong>Segregation of distribution activities<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The majority of the time, the registered investment advisor pitches the investment option which offers the highest commission. Therefore, as per SEBI&#8217;s guidelines, the investment advisor must display all the charges and commissions related to the investment option.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Implementation-services\"><\/span><strong>Implementation services<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The advisor provides many services to the investor. However, the choice should be left to the investor. Furthermore, there should not be any obligation on the investor to avail of the services.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Agreement\"><\/span><strong>Agreement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As per SEBI&#8217;s mandate, for better understanding and legal records, an agreement is mutually signed by both parties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fees\"><\/span><strong>Fees<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As per <a href=\"https:\/\/www.tickertape.in\/blog\/securities-and-exchange-board-of-india-functions-powers-and-regulations-of-sebi\/\">SEBI<\/a> guidelines, advisors need to charge fees at the prescribed rates for all their services. However, the fee structure levied by the investment advisor differs from product to product.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"manager\"><span class=\"ez-toc-section\" id=\"Difference-between-a-mutual-fund-advisor-and-a-manager\"><\/span><strong>Difference between a mutual fund advisor and a manager<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There is a major difference between the two. A mutual fund manager is employed by a mutual fund house or an AMC and is responsible for building the specific portfolios, keeping the objective of the fund in mind.&nbsp;<\/p>\n\n\n\n<p>Whereas, a mutual fund advisor&#8217;s main job is to sell mutual fund products to potential investors. They work according to the client&#8217;s needs and help make the right decision based on the investor\u2019s financial goals.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"for\"><span class=\"ez-toc-section\" id=\"SEBI-guidelines-for-mutual-fund-investors\"><\/span><strong>SEBI guidelines for mutual fund investors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per <a href=\"https:\/\/www.tickertape.in\/blog\/stock-exchanges-in-india\/?utm_source=blog&amp;utm_medium=article\">SEBI<\/a> recommendations, mutual fund investors should focus on obtaining knowledge about the investment options in the field. Furthermore, if possible, they should do their homework before approaching any advisor for their services. It helps investors to make informed choices and not blindly be way-led by mutual fund advisors.<\/p>\n\n\n\n<p>As an investor, one should focus on portfolio diversification. The advisors will guide you towards diversification. However, it is the investor\u2019s responsibility to ensure that their portfolio is diversified well to minimize the risk.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Bottom-line\"><\/span><strong>Bottom line<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mutual funds that are dynamic investment opportunities may work out better for your portfolio when navigated through registered mutual fund advisors. They not only understand your goals and risk but also consider market variations and other uncertainties before recommending funds. SEBI recommends every investor to thoroughly research the funds and also the advisors to safeguard their investments.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Wondering what a mutual fund advisor does? Click here to know more about the role, regulations on &#038; importance of a mutual fund advisor and choose your fund advisor wisely!<\/p>\n","protected":false},"author":54,"featured_media":4268,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[8,1750],"tags":[],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2021\/08\/Informative-2-4.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4528"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/54"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=4528"}],"version-history":[{"count":4,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4528\/revisions"}],"predecessor-version":[{"id":8747,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/4528\/revisions\/8747"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/4268"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=4528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=4528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=4528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}