Why Do You Need A Mutual Fund Advisor?

Surely, the title of the blog is the question that has been pestering you, and here you are! In recent years, mutual funds have gained immense popularity as an investment option. Benefits like diversification, liquidity, customization, etc are key highlights of mutual fund investments. The intervention of regulatory bodies like SEBI has proved useful to clarify the uncertainties around mutual funds. Having said this, it also requires a certain level of awareness on the investor’s part. To make a wise investment decision, you need to understand and analyze your goals and risk profile. This is where a mutual fund advisor comes in. 

 

Who are Mutual Fund Advisors? 

They are qualified professionals with a deep understanding of the purposes and nuances of different types of mutual fund investments (eg, ELSS mutual funds, SIP mutual fund, etc). They understand your financial goals and capabilities to advise you of funds that match your interests the best. Thus, the person should have a valid certification from the National Institute of Securities Market (NISM). The qualifying examination is the ‘NISM Series V-A: Mutual Fund Distributors Certification Examination’. Post this examination, AMFI issues an ARN Number. It is the moral responsibility of the fund advisor to disclose all the details of a fund. At times you might be skeptical about the advisor taking an advantage of you. Don’t worry, there are laws to ensure ethical compliance. They should also avoid conflict of interests and recognize any compensation they receive for recommending certain investments.

 

How does a Mutual Fund Advisor help you at every stage of investment? 

Now that we know who mutual funds advisors are, let us understand what are the roles they play. Below are the roles and responsibilities of a mutual fund advisor. 

 

• Educating the investor

The very basic purpose of a mutual fund advisor is to chalk out a financial plan based on the client’s financial goals and educate the client on how to achieve them. They also educate the client about the various types of investment options. This enables the client to decide which fund will help or hinder their financial goals. 

 

• Weighing the risk-taking capabilities of the investor 

Advisors chalk out a tailor-made investment strategy that is based on the risk appetite of the investor. For example, equity funds are riskier than debt funds, but they may not be preferred by many based on financial goals. The advisor analyses the long-term and short-term financial goals, investment tenure, age, liabilities like expenses, family status, and current financial responsibilities before devising an investment strategy.

 

• Analyzing the investment options

There are a plethora of investment options available for investors. Well, that could be a mess. After the client’s goals and requirements are in place, the fund advisor carries out a thorough analysis of the current market conditions. Then they suggest equities, debt funds, or money market instruments accordingly. They also stay up-to-date with the latest financial news and trends to ensure they offer relevant advice.

 

• Diversification of the portfolio 

Diversification is a crucial aspect to spread the total risk over a range of investment options. A lot of research goes into tracking the best investment options across various industry sectors and markets. Therefore, the mutual fund advisor plays a significant role in optimizing the portfolio and minimizing risks.

 

• Devising the right investment strategy

After analyzing the possible investment options, the fund advisor comes up with a suitable investment strategy. The advisor often combines different investment options to diversify the portfolio to minimize risks and maximize returns. For instance, combining stocks with IRAs and bonds, etc. – The advisor might reassess strategy if the client’s goals change. The advisor, hence, keeps a close watch on the client’s portfolio and suggests modifications if needed.

 

• Record Keeping 

An important factor of a fund advisor’s job is to handle important financial details of the client. The records of services are maintained like – invoices, details of the services offered, and any other transactions. This documentation is important during the audit of the firm by regulatory bodies.  

 

How to find an ideal mutual fund advisor 

Coming down to the most difficult task, experience matters, especially experience across market ups and downs, look for at least 10 years experience. Check out how his past clients have rated him using the ARN Number. See if the advisor can explain asset classes in different funds and what could be the outcome of different combinations. Hence, take your time to find the one. We at Khasnis Prime Wealth have been in this industry since 2002, with wide experience, and provide you with a team of professional investment advisors/investment planner who charts out the best portfolio for you. 

 

Disclaimer

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax, and financial implications of the investment/participation in the scheme.

 

Khasnis Prime Wealth Private Limited will not accept any liability/ responsibility/loss incurred on any investment decision taken on the basis of this information.