When it's about differentiating both of them it's quite difficult to do, as both assist in making investment decisions. That involves choosing MF schemes as well. Both are the enrolled entities and managed by the different regulatory body. As the Mutual Fund Distributor is under and controlled by AMFI ( The Association of Mutual Funds in India). And the Investment Advisors are controlled by SEBI (Securities and Exchange Board of India).
Image result for How Mutual Fund Distributor Is Different From an Investment Advisor?
Before moving on first understand a difference lets discuss that who are mutual fund distributor and investment advisor is?
Investment Advisor- A Investment Advisor is an individual or group who give financing and investment advice. Even manages securities analysis in return for a fee, whether by direct administration of client assets or by written publications. If he has sufficient assets to be enrolled with the SEC is recognised as a Registered Investment Advisor or RIA. Investment Advisors are also known as "Financial Advisors". He/she do an evaluation of the investor's assets, liabilities, income and expenses and advise investment plan.
Mutual Fund Distributor - They be person or entity facilitating in buying and selling of MF units to the investors. They earn income in the form of commission for bringing leads(investors) for investing in MF schemes. He/she is expected to know the investor's situation, risk profile and suggest suitable investment plan to meet the investor's demands.
Getting a commission never means that a Mutual Fund distributor is allowed to trade the MF scheme to the investors just to get a commission. Well, the regulations are very severe in this respect.
Now let's discuss 8 points which help in differentiating between a Mutual fund distributor from Investment Advisor.

  • Paying mode for advice

We all know that mutual fund distributor is enrolled with AMFI, they are usually the executors of your investments. The investor asks the mutual fund distributor to buy/sell MF plans for them. From doing so the AMC gives commission to the MFD. To avoid mis-selling of MF plans the SEBI has directed AMCs. To pay only trail commission by utilising the trail-only model. Also, not to give any upfront commissions or upfronting of any trail commissions straight or secondhand. Even the contests or sponsorships would be recognised as an upfront payment. These investment advisors normally charge a fee rather than get commissions from AMC. So with this change in the industry investors.

  • Depositary Duty

Distributors differ from advisors in the sense that advisors are bound by depositary duty. That implies they are committed to giving investors with honest advice, while distributors are bound by no such promise.

  • Examination and Certification

The examination exam for both mutual fund distributor and investment advisor are different. For MFD get a valid certification by the National Institute of Securities Market(NISM). By clearing their certification examination NISM Series V-A: Mutual Fund Distributors Certification Examination. For Investment Advisor a person needs to clear both the levels 2 levels:
  1. NISM-Series-X-A: Investment Adviser -Level 1
  2. NISM-Series-X-B: Investment Adviser -Level 2
The mutual fund advisor must have a certification in financial planning.

  • Advisers can advise but not distribute

An MFD has a plus point that they can advise for the best MF schemes. They assist an investor to understand the benefits of mutual funds, types of MF and risk factor. They also guide the investor about the MF investment and meet the investors demands. After that, they ask the investor to invest money in mutual funds. They keep distributing the mutual fund's plan. The Investment advisors give advice on which MF to invest but cannot work as a distributor. Their duty is just to advise. After that its investors choice but distributor make sure that investor does invest in mutual funds.

  • Duties differentiation

Apart from this, the central focus of a mutual fund distributor is the distribution of the funds. Whereas the job of a MF, the advisor involves various other duties.
  1. Helping the investor change his/her portfolio
  2. Record-keeping
  3. Evaluating risk-taking capacity funds
  4. Choosing the right investment option
Direct plan vs Regular plan
A Mutual fund distributor will give Investor regular plan and ask them to invest in the same. But the Investment Advisors advice an investor to invest in direct plans. In past the MF had to be purchased under the guidance of distributors, there wasn't any different option. But in January 2013, SEBI mandated the AMCs to begin direct plans of the mutual funds. This enables the advisors to not only advise investors but also assist them to invest in direct MF plans. Direct plans have a more economical expense ratio than the regular plans. So while distributors may fascinate you towards the regular plans for their commissions, advisors will not.

  • Take into outline their level of gathering relevant information differs

Recognizing the necessity to find general information about your financial profile, is the base of good financial planning. It is consequently necessary to guarantee that the person you're trusting with for finances, is interested to ask important questions. Like about your goals, income, expenses, long and short-term goals, assets, liabilities, tax status etc. They must also offer need-based plans to reach your financial goals, rather of product-based advice. While MFD is likely to discuss your demands with products they are commissioned to market. A financial advisor is expected to offer unbiased advice to fit your necessities.

  • Discussing the factor of risk and returns

This factor is usually discussed by the advisor in a great manner than the Investment advisor. He/she will discuss the risk factors for MF I.e high, low, moderate etc. Then he will look out for MF scheme performance in past years. After that will suggest you invest in the plan. The investment advisor will ask the distributor to convenience the investor to invest in plan particular MF plan they are looking for just to meet their financial need. An advisor would be more interested in evaluating your risk appetite. Also, setting the proper expectation with concerns to returns on investment.
Conclusion
It's quite difficult to say that a mutual fund distributor is necessary or adviser. Both are an important source for the right investment in mutual funds. From the MF regulation view- all persons including companies, who get AMFI certification number (ARN), are mutual fund distributors, from the highest to the smallest. In the way of distributing the MF schemes of different AMCs, they also need advice in many ways - scheme selection, asset allocation, tax planning etc, all in the scope of MF schemes. So its all investor choice that he directly wants to contact a distributor or want advice for mutual funds.
'Invest today - Enjoy tomorrow'!
This article is written by Shrishti Jain a content writer at WealthBucket. It's one the leading portal for investment services and also assists in becoming a MF Agent. They offer various services like Liquid Funds, Income funds, equity fund and many more. For more detailed information do visit our website and start investing today for a better tomorrow.

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