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Who can become a Distributor with Principal Mutual Fund?

Any of the following persons / entities can become a Distributor with Principal Mutual Fund:

  • Individuals
  • Sole Proprietorships
  • Partnership Firms
  • Companies
  • Societies, Co-operatives & Trusts

What is the eligibility criterion for becoming a Distributor with Principal Mutual Fund?

To become a mutual fund distributor you need to have either of the following:

Certification from the Association of Mutual Funds in India (AMFI) having passed the AMFI Mutual Fund (Advisors) Module before June 01, 2010 and a valid AMFI Registration Number (ARN)

OR

Valid certification from the National Institute of Securities Markets (NISM) by passing the NISM certification examination on or after June 01, 2010 and a valid AMFI Registration Number (ARN).

Note: In case of non-individual applicants / distributors, any person(s) employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund products is required to have either AMFI or NISM certification.

For more details regarding the NISM certification examination, please visit www.nism.ac.in


What is the process of becoming a Distributor with Principal Mutual Fund?

To join the Principal Mutual Fund Distributor Community, you need to be empanelled as an authorised Distributor of Principal Mutual Fund.

  • After passing AMFI or NISM certification, you need to apply for and obtain an AMFI Registration Number (ARN). AMFI will issue a card with your ARN.
  • After obtaining the ARN from AMFI, you need to fill up the Distributor Empanelment Form, or contact any of the offices of Principal Mutual Fund to obtain an empanelment form by mail.
  • The Distributor Empanelment Form duly filled in, along with the ARN Card /Certificate and other supporting documents, should be submitted at any of the regional offices of Principal Mutual Fund from where you would like to operate.
  • After reviewing the application from, Principal Mutual Fund will empanel you as a Distributor and you will receive an empanelment confirmation letter within a week, along with all relevant marketing material (forms, fact sheets etc.). (Please note that Principal Mutual Fund reserves the right to reject any application without assigning any reason).

What are the documents to be submitted along with the Distributor Empanelment Form?

For empanelment as a distributor with Principal Mutual Fund, you have to submit a duly completed Distributor Empanelment Form enclosing the following documents (self-attested copies) to any of our Investor Service Centres.

For IFAs

  • Copy of the AMFI Certificate
  • Copy of the AMFI Letter and ARN Card

For Corporates

  • Copy of the AMFI Certificate
  • Copy of the AMFI Letter and ARN Card
  • MOA
  • Authorized Signatory List
  • Board Resolution

For Partnership Firms

  • Copy of the AMFI Certificate
  • Copy of the AMFI Letter and ARN Card
  • Partnership Deed and Resolution
  • Authorized Signatory List

On the completion of the process of empanelment, a letter confirming the empanelment will be despatched to the distributor.


Why is ARN required?

An ARN number is essential as it works like an identity for an individual. It indicates that the individual is a registered Financial Advisor. It helps identify applications or assets mobilized, and computing brokerage.


What is brokerage and how is it paid?

Brokerage is the payment made to distributors who procure funds for Principal Mutual Fund. Brokerage Payments may be made on a Monthly or Quarterly basis. Payments are typically made as follows:

Monthly Payments

  • Upfront:
    Upfront Payment is a one-time payment made to the Distributors in the following month of the procurements of the funds.
  • First Year Trail:
    The payment is made across all schemes till the investor remains in the fund for the units held for 1st year. Annualized fee is also referred as First year Trail Fee.
  • Incentives:
    The incentives are paid based on the mobilization of applications, achieving targets etc. by the Distributors.

Quarterly Payments

  • Trail:
    The payment is made across all schemes till the investor remains in the fund for the units held from second year onwards.
  • The brokerage for previous month is released by the 15th of every month.
  • Typical Brokerage Calculation
    Upfront: Amount x Rate / 100
  • Annualized / Trail:
    Daily product * Rate/100 * 1/365
    Daily product = Balance units * Cumulative NAV
    For example, Distributor X procures 1,00,000 units on 1st January and the rate of commission is 0.50% p.a. payable monthly and the investor redeems 50000 units on 15th March. Cumulative NAV (addition of all the NAV from 1st of the month to the end of the month) is 1500.00 in January, 1256.54 in February and 624.00 in March (cumulative up to 14th March) and 598.24 from March 15th to 31st.

The payments may be made as follows:

  • January : 2054.79
  • February : 1721.29
  • Up to March 14th : 854.79
  • From 15th -31stMarch : 409.75

Note

  • Distributors are not eligible for brokerage for their own investments in mutual funds.
  • Distributors have to submit an Annual certification within 3 months of completion of every Financial Year (Declaration in the format specified by SEBI/ AMFI) failing which brokerage would be held back till the time it is submitted.
  • It may be noted that the Brokerage Concept could differ and vary from time to time or from fund house to fund house. Hence the Distributors are advised to get themselves conversant with such concepts practiced by the concerning fund houses/Asset Management Companies.
  • Source: www.Karvymfs.com



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