Roles & Responsibilities of A Fund Advisor

Updated on: Jan 11th, 2022


8 min read

Mutual fund investments need an in-depth understanding. Nowadays, it is easier to gain information and compare different fund types online. However, a mutual fund advisor can help put things in perspective.


You would have come across individuals approaching you and trying to recommend specific funds. Who are these people? Mutual funds have become a popular investment option in recent years. The uncertainty about them have reduced, thanks to intervention from regulatory bodies such as the Securities and Exchange Board of India (SEBI). 

Now, more and more people are turning towards mutual fund investments, and why not? Mutual funds provide you with the advantage of diversification, liquidity, easy customisation and expert management. However, it also calls for a certain level of awareness from the investor’s part. So, it is essential to know your investment goals and risk profile that can help you choose a fund accordingly. This is where a mutual fund advisor can help you.   

Who are mutual fund advisors?

Mutual fund advisors are qualified professionals who can understand the purpose and nuances of a fund. Their job includes figuring out which fund matches the investor’s interest. Thus, the person should have a valid certification from the National Institute of Securities Market (NISM).

The qualifying examination is ‘NISM Series V-A: Mutual Fund Distributors Certification Examination’. After clearing this exam, AMFI issues an ARN Number. An advisor should, therefore, be able to understand the client’s investment goals and needs. If you are apprehensive that a fund advisor may take advantage of you, don’t worry. There are laws in place to ensure ethical compliance – ‘Fiduciary Duty’. It is the moral responsibility of the advisor to disclose all details about an investment. They should also avoid conflict of interests and recognise any compensation they receive for recommending certain investments.

Role of mutual fund advisors

Educating  the investor(s)

The advisor has to chart a financial plan for the client based on their financial goals and educating the client on how to achieve them. This involves exploring different investment options. Therefore, you can easily evaluate how each can help or hinder the client’s financial goals.

Evaluating risk-taking capacity

Advisors suggest the right investment strategy based on the risk appetite of the investor. For instance, equity funds are riskier than debt funds, and not every investor will prefer it. The advisor considers the long-term and short-term financial goals, investment tenure, age, expenses, family status and current financial responsibilities before devising an investment strategy.

Analyzing investment options

Once the client’s goals and requirements are in place, the fund advisor completes a thorough analysis of market conditions. Then they recommend equities, debt funds or money market instruments accordingly. Advisors also stay up-to-date with the latest financial news and trends to ensure they offer relevant advice.

Devising the right investment strategy

After analysing the possible investment options of the customer, the fund advisor plans a suitable investment strategy. This involves combining different investment options to diversify the portfolio to minimise risks and maximise 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.

Helping investors diversify their portfolio

Diversification is a crucial aspect as it plays a major role in spreading the total risk over a broad investment range. Much research goes into tracking the best investment options across sectors and markets. Therefore, the mutual fund advisor plays a significant role in optimising portfolio and minimising risks.


A critical aspect of a fund advisor job is to handle discreet financial details of the client. Hence, he maintains the records of services they provide – 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 select a mutual fund advisor

On the whole, the advisor is accountable for any statement or suggestion he gives you. He must adhere to the Code of Conduct for intermediaries of mutual funds that AMFI and SEBI mandate. It elaborates on what investors can expect from advisors.

Example, they cannot glide over the risk nature of a fund and give you false information (oral ones don’t count). If they do, you can report them to SEBI or AMFI. It can even result in their license getting cancelled. When it comes to financial advisors, 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. All of this can take time. Hence, if you feel that the fund advisor is trying to rush you into a decision, he is not the one for you. Market volatility will not matter for long-term investments, anyway.  

AMFI Registration number

Difference between mutual fund advisors & fund managers

It’s important to note that there is a vast difference between a fund advisor and a fund manager. They are not the same, and you cannot use the term interchangeably. A fund manager, also known as a portfolio manager, is responsible for maintaining an investment account. He also builds a portfolio, keeping the client’s long-term financial goals in mind.

Financial advisors are responsible for recommending the right investment plan according to the client’s financial goals. Successful advisors, therefore, possess superior analytical abilities, subject matter expertise, and customer service skills. This helps clients chart out their financial objectives. It would be best if you also have a clear idea about how much the advisor can charge, whether it is the commission or fixed fee or both. This is different from the expense ratio or fee to the fund house.

In short, a competent fund advisor can make a massive difference with experience and expertise. Remember, an advisor is different from a distributor. For instance, ClearTax Invest is a distributor that handpicks the best-performing funds from the top fund houses. It is instant and saves a lot of time and effort. So start investing.  

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Quick Summary

Mutual fund advisors play a crucial role in guiding investors through investment options tailored to their financial goals and risk tolerance, while adhering to regulatory standards. They offer expertise in diversification, risk evaluation, market analysis, and portfolio optimization. It's essential for investors to select experienced advisors who comply with ethical standards and understand different asset classes. ClearTax Invest is an example of a distributor that simplifies the investment process. Save taxes and start investing now.

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