Financial Advisor or Mutual Fund Distributor? What Each Can Do in India

When people in Ahmedabad start investing, they often search for a "financial advisor". In India, the word adviser has a specific legal meaning, and it is different from a mutual fund distributor. Here is the simple version.

What an investment adviser does

A SEBI-registered investment adviser gives personalised investment advice and financial planning across products. The client pays a fee, and the adviser cannot earn commission on products. You can check any adviser's registration on SEBI's website.

What a mutual fund distributor does

A distributor helps you buy mutual fund units, set up SIPs, complete KYC and handle transactions. The distributor is paid a commission by the fund house, which must be disclosed. A distributor can explain and give basic advice on the mutual fund schemes it distributes. What a distributor cannot do is run a separate advisory service or advise the general public on shares, bonds or other non-mutual-fund products; that needs SEBI investment adviser registration.

Questions to ask anyone you speak to

1. Are you registered with SEBI as an investment adviser, or with AMFI as a distributor?

2. How are you paid, and where is it disclosed?

3. Is this plan regular or direct, and what is the expense ratio?

4. What are the exit load and tax rules if I redeem?

Source for the rules: SEBI (Investment Advisers) Regulations, 2013 and the AMFI Code of Conduct for mutual fund distributors.

Mutual fund investments are subject to market risks. Read all scheme related documents carefully. This article is general education, not investment advice.

Message or call us on WhatsApp at 8460999234. Rushhabh Financial Services is an AMFI-Registered Mutual Fund Distributor in Maninagar, Ahmedabad.