Investor Services for NISM certification
Once an investor decides to invest, a lot of service work follows: KYC, the application, payments, nominations, SIPs, statements, changes of details and, one day, transmission to heirs. A distributor who handles these smoothly earns lifelong trust.
Mutual FundsSeries V-A60 MCQs4 lessons17 flashcards5 memory tricks
Practise Investor Services free
What you'll learn
- KYC: the first step
Take a new investor through KYC and explain the related compliance forms. - Holding, nomination and minors
Choose the right mode of holding and nominate correctly; handle a minor's folio. - Transactions and systematic plans
Process purchases, redemptions, switches and SIPs, STPs and SWPs. - Statements, changes and other services
Explain what statements investors get and how changes, transmission, pledges and transfers work.
Key formulas
| Units per SIP instalment | Instalment ÷ NAV on that date |
|---|---|
| Average cost per unit (SIP) | Total invested ÷ total units |
| Rupee cost averaging | Average cost ≤ simple average of NAVs |
Concepts explained
KYC through KRAs
KYC is a one-time identity and address verification under PMLA, stored with a KRA and CKYC so it works across all mutual funds.
What it means
- PAN is mandatory.
- IPV or video IPV is done by a SEBI intermediary.
- Status: validated, registered or on hold; on hold blocks new transactions.
Related terms
- FATCA/CRS: self-declaration of foreign tax residence
- UBO: ultimate beneficial owner of a non-individual investor
Nomination and transmission
A nominee receives units on the holder's death without court papers; joint holders get them before the nominee.
What it means
- Available to individuals (single or joint), not to minors' folios or non-individuals.
- Up to 10 nominees with percentages (SEBI 2025; to verify).
- Transmission isn't taxed as a sale.
- A and B hold jointly; C is nominee
- A dies
- Units go to B (survivor)
- If B later dies, units go to C
Answer: Survivor first, then nominee
Rupee cost averaging
A fixed sum invested at intervals buys more units when prices are low and fewer when high, so average cost ≤ average price.
What it means
- Removes the need to time the market.
- Doesn't guarantee profit.
- ₹1,000 at NAV 10, 20 → 100 + 50 units
- ₹2,000 ÷ 150 units
Answer: Average cost ₹13.33 vs average NAV ₹15
SIP, STP and SWP
SIP puts money in regularly; STP moves money from one scheme to another regularly; SWP takes money out regularly.
What it means
- STP is often liquid → equity to spread entry.
- SWP gives regular income; each withdrawal is a redemption.
- All three are taxed as redemptions/purchases.
Consolidated Account Statement
The CAS shows all mutual fund holdings across AMCs for a PAN, with transactions, commission and expense ratios.
What it means
- Monthly if there's a transaction; half-yearly otherwise.
- Issued by depositories for demat holders; otherwise by RTAs.
Memory tricks
SIP invests regularly, STP transfers between schemes, SWP withdraws regularly.
On death, units go to surviving joint holders; the nominee gets them only after all joint holders.
Minor is sole holder; guardian acts; no nomination; status change at majority.
KYC done once is stored with the KRA/CKYC and valid across mutual funds.
Redemption proceeds within 3 working days; account statement within 5 working days.
Try 3 NISM-style questions
Q1. Which is the investor's responsibility in servicing?
- Computing the scheme's NAV each day and checking it
- Auditing the RTA
- Approving the format of the CAS
- Keeping KYC, bank, contact and nomination details current
Show answer
Answer: (4) Keeping KYC, bank, contact and nomination details current
Investors must keep their own details updated.
Q2. Which statement about KYC and risk profiling is correct?
- KYC verifies identity and address; risk profiling assesses suitability, a separate step
- KYC includes a full risk profile, so nothing else is needed
- Risk profiling replaces KYC for investors who invest through a distributor
- Neither is needed
Show answer
Answer: (1) KYC verifies identity and address; risk profiling assesses suitability, a separate step
They serve different purposes.
Q3. When there is no nominee or joint holder, the claimants generally need
- Only the death certificate, whatever the amount
- Legal heir documents such as a succession certificate or probate, depending on the amount
- The written consent of the deceased's distributor and the AMC's sales team
- SEBI approval
Show answer
Answer: (2) Legal heir documents such as a succession certificate or probate, depending on the amount
Without nomination, legal heirship must be proved.
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