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How to Choose a Mutual Fund Distributor

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The mutual fund industry has added more than 8,000 new distributors this calendar year. Many of these new distributors plus some from the existing community may approach you to solicit mutual fund investments. It would make sense to choose an appropriate financial advisor who can help manage your investments:

1. Qualifications of the distributor

Check how well qualified the distributor is in terms of education and what kind of knowledge and experience he or she possesses. The mutual fund advisor should have good knowledge of different asset classes such as equity, fixed income and gold. He and his team should be in a position to decipher and under stand how these asset classes would be affected by various domestic and international events. The advisor should be able to identify products that will meet your life stage requirements as and when they are needed. when they are needed.

2. Is your distributor easily accessible?

It is important for a distributor who you entrust your money with to be accessible. The advisor or his team should be able to answer your queries within a reasonable period of time and should be accessible by whatever means of communication you choose which could be telephonic, email and meetings. Time is of essence in the financial world and he should be world and he should be able to execute your in vestments quickly .

3. Can your advisor offer comprehensive services?

Most investors do not want to discuss their finances and in vestments with too many people again and again since these are confidential things. They want an advisor who can handle their investments with confidentiality . Choose an advisor, who is unbiased, can offer you mutual fund products from all fund houses.

4. Check past track record

It is important to know the past track record of the person whom you entrust your money with. What field was he working in, what knowledge does the advisor possesses.There is no formal rating or ranking system for mutual fund distributors in India. Hence in this scenario, the best way is to ask around for referrals. Use social media websites, to understand if anyone has recommended the advisor or his firm. That will give you some idea of his strengths. Check online for referrals, ask your friends or relatives for references, how long the advisor has been in business and his way of operating.

5. How is the advisor compensated?

A good advisor needs to be compensated well. Ask your ad visor if he uses a distribution model, where he gets com mission from the fund house for every investment that you make. Alternatively, some advisors charge you a fee for the service, depending on the time they have to spend with you or your personalised requirements. There are many online portals that do help you make a financial plan, by gathering data from you and it could be free, while there are seasoned financial planners who could charge a fee for the same. A comprehensive financial plan, requires effort to make and it takes into account your risk taking ability, future needs and life goals.



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