Amfi launches an internship plan for distributors of mutual funds
Industry body Association of Mutual Funds India (Amfi) on Monday launched an internship scheme as part of a regulatory sandbox initiative for new qualified people who can be trained to become distributors of mutual funds (MFDs) with the aim of increasing the number of MFDs and stimulating financial inclusion.
The internship plan is being piloted under a regulatory sandbox project approved by the Securities and Exchange Board of India (Sebi) to increase the number of individual MFDs in the country.
The internship plan is aimed at new graduates, educated but unemployed people, especially those who may have lost their jobs and income due to the covid-19 pandemic, retirees, women and women homemakers who may have taken a mid-career break to care for their youngsters, and anyone who now wants to start their own business as independent entrepreneurs.
The course will be sponsored by individual mutual fund houses. Aspirants to become MFDs under this program will benefit from exclusive recruitment and connection with a specific “sponsor” asset management company (AMC) for a period of 12 months.
During this period, the MFD apprentice will be supported by the sponsoring AMC to obtain the required NISM certification, acquire the Amfi Registration Number (ARN), operational setup, training on operational aspects and acquisition of clients as well as a stipulated monthly allowance up to ₹15,000 for a maximum of 12 months.
The MFD Apprentice will be onboarded to a single sponsoring AMC during the apprenticeship period, but will be free to partner with multiple AMCs after this initial period ends.
Under current Sebi regulations, AMCs can only pay a trailing commission to distributors and no upfront commission is allowed. Although the trailing commission model aligns the interests of investors, distributors, and the AMC by removing any perverse incentives for churn investments, it takes a few years to build a significant AUM that could provide a reasonable amount of living income. through the trailing commission, especially for new entrants.
As part of the regulatory sandbox initiative, Sebi granted Amfi’s request for relaxation in the above stipulation, so that AMCs could pay a reasonable stipend to the MFD trainee during the initial phase of their career for up to 12 months, until the MFD apprentice builds a lasting clientele and AUM.
A Balasubramanian, president of AMFI said: “When we published the AMFI BCG “Unlocking the ₹In the 100 trillion opportunities white paper, we had considered growing the base of mutual fund distributors from around 1 lakh to 5 lakh distributors. Through Sebi’s regulatory sandbox, we plan to add approximately 5,000 MFD apprentices this year who will be trained and supported by industry until they are ready to be self-sufficient.”
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