AMC vs MF Platform: Which Is Better for MFDs?

Mutual Fund Distributors (MFDs) have two ways that enable them to conduct business. These include direct association with the AMCs or association with the MFD platform for different functions of distribution. Both are useful in the distribution of mutual funds, but serve different purposes in relation to scheme availability, transactions, and client service, and more.

AMCs deal with the schemes of the mutual funds, while the platforms may offer technical or transactional support, among others. It is important for MFDs to understand the difference between these two.

What Is an AMC and How Does It Work for MFDs?

Asset Management Company is a company that establishes and manages mutual fund schemes. They gather money from different investors and invest it depending on the investment objective and strategy of the scheme in question. AMC is responsible for the following tasks: Investment Management, Scheme Management, and Disclosure Management.

MFDs can offer schemes of AMCs after completing all the registration and onboarding procedures. AMC empanelment is one such process. Possession of an ARN does not necessarily mean that a distributor will be eligible to distribute schemes of every AMC. As per AMFI's requirements, MFDs have to get themselves empanelled with the concerned AMC. Once empanelled, the distributors can help make investments in the eligible schemes and earn the corresponding trail commission under the terms of the AMC.

What Is an MFD Platform and How Does It Work?

An MFD platform can be defined as a technology-based solution that may assist MFDs in handling mutual fund distribution functions via a common interface. Yet, not all platforms function in the same manner. Services offered by these platforms can be divided into several categories.

Technology and back-office platforms: These offer a variety of solutions related to client management, portfolio management, reporting and other operations. These solutions cannot act on their own in executing transactions.
Transaction platforms: These enable mutual fund transactions through authorised infrastructure. For instance, an MF portal provides solutions for order placement, client onboarding and transaction management.
Distribution/sub-distribution platform: Some service providers may function on the principle of a principal distributor, where qualified sub-distributors handle things according to the relevant ARN and compliance guidelines.

AMC vs MFD Platform: Key Differences MFDs Should Know

The key point is that an AMC manages mutual fund schemes, whereas an MF platform might assist in the distribution and operation of these schemes. The following table illustrates the differences between them.

Factors	Direct AMC Relationship	MFD Platform
Role	Manages mutual fund schemes and also provides scheme-related information and distribution services.	Provides technology, back-office tools, transaction access or distribution support.
Access to Schemes	An MFD can distribute the AMC scheme with which they are empanelled.	MFD platform provides access to schemes from multiple AMCs.
Onboarding and Empanelment	MFDs must complete the concerned AMC’s empanelment requirements before distributing its schemes.	Reduces complexity for distributor onboarding and offers a platform through which distributors can perform their tasks.
Transaction Facilities	Transactions can be done through AMC-authorised channels.	Provides a common transaction interface or connects with authorised transaction infrastructure.
Client and Portfolio Information	The AMC may provide information relating to its own schemes and investors through distributor facilities.	Offers consolidated client records and portfolio views across supported AMCs.
Commission Arrangements	Eligible MFDs receive applicable trail commission from the AMCs with which they are empanelled.	Provides commission tracking and business reports to help MFDs monitor their distribution earnings.

Features of an MFD Platform That Can Support MFDs

An MFD platform consolidates various tools and services that can help MFDs to conduct their business operations. Some of the features include accessing schemes provided by AMCs, tracking commissions, among others.

1. Access to Multiple AMCs and Schemes

An MFD platform gives access to many mutual fund schemes offered by various AMC companies via a single portal. The portal enables MFDs to explore various investment opportunities and helps their clients with diverse financial needs and risk-taking abilities.

2. Digital Onboarding and Empanelment Support

An MFD platform streamlines the process of onboarding distributors and investors through digitisation. It assists the MFDs in handling their onboarding processes and accessing all the necessary information that is required for distribution across supported AMCs. The distributors are responsible for completing the AMC empanelment or registration requirements.

3. Transaction and Portfolio Management

An MFD portal has facilities for facilitating transactions like purchase of funds, redemption, SIPs, etc. Transaction records and portfolio information can also be viewed through this portal, which will assist the MFDs in keeping track of their clients' investments and gathering information about the same from a single source.

4. Client Relationship Management

Client relationship management systems aid MFDs in organising investors' information, keeping communication records, and following up on contacts. Reminders, portfolio updates, and other client servicing functionalities assist in engaging investors regularly.

5. User-Friendly Technology and Support

A platform that is simple to navigate makes the work easy, especially for MFDs who have many clients. For example, MFD platforms such as Nivesh enable users to use all the services, from digital onboarding to transactions, tracking the portfolio, and management of clients, in one place. These features help distributors manage their operations more efficiently.

6. Commission Tracking and Business Reports

The best mutual fund distributor platform offers commission tracking and business reporting features that allow the MFDs to keep track of their earnings and business operations. These reports give an indication of the transactions, AUM, and commissions, which makes it easy for MFDs to analyse their performance. MFDs can also make use of these details in conjunction with the AMC commission reports.

AMC or MFD Platform: Which Option Should MFDs Choose?

AMCs can be suitable for distributors who want to work with AMC systems individually and directly associate with the fund houses. Direct AMC association is also beneficial where an MFD wants to concentrate only on specific AMCs and their scheme-related information channels.

An MFD platform would provide more convenience to distributors requiring a unified system interface for accessing several AMCs or handling selected operational activities. It will depend on how well it covers the scheme, its features, service quality, and cost. MFDs need to evaluate such aspects against their specific requirements, and not just base their decision on how many features it has.

Grow Your Mutual Fund Distribution Business with Nivesh

Nivesh provides MFDs with a digital platform that allows them to manage and grow their business of mutual fund distribution. Using Nivesh’s platform, distributors get access to the SBI Mutual Fund, 40+ AMCs, and many other financial products.

If you have just commenced or want to grow your business in the distribution field, then Nivesh can provide you with the right tools, products, and dedicated partner support to help you manage your operations efficiently and explore new growth opportunities.

Key benefits of partnering with Nivesh:

Availability of mutual fund schemes from different AMCs on a single platform.
Digitisation of the investor onboarding process and transactions.
Tracking of client portfolio and earnings.
Analysis of business through reports of distribution performance.
Support from partners for any business queries.
Availability of various products for different investors.

Become a Nivesh Partner and take your mutual fund distribution business forward.

Conclusion

Not all choices can fit all distributors. AMCs deal with mutual fund schemes, whereas the platforms might assist MFDs in organising transactions and other aspects of their business. Careful comparison of what is provided should be conducted prior to making a choice. Choosing an MFD platform that will match their needs, along with AMC relationships, can enable MFDs to run their mutual fund business more efficiently.

FAQs

1. Can MFDs work directly with more than one AMC?

Yes, MFDs can work directly with more than one AMC only after fulfilling the empanelment criteria of the particular AMC. They must also follow AMFI and SEBI requirements when distributing mutual fund schemes.

2. What is AMC empanelment?

AMC empanelment is the process through which the mutual fund distributor (MFD) gets registered and certified by the Asset Management Company (AMC) to sell its mutual fund schemes and earn distribution commission from it.

3. Are there any charges for the use of MFD platform services?

Charges depend on the service model of each provider. There may be charges in the form of subscriptions or transactional services, among others, while some providers may have different commercial arrangements.

4. How to buy MF directly from AMC?

You can buy direct mutual funds from an AMC by completing your KYC verification and transacting via the fund house's website, app, or branch.

5. How can an MFD platform assist MFDs in the management of their clients?

Based on the capabilities of the platform, the MF platform could offer clients' information, portfolio information, transaction history information, and communication tools. The facilities can assist the distributors in organising their servicing activities.