How a distributor earns
Commission, done right
Money shapes behaviour, so the exam checks you understand how a distributor is paid and the lines around it. The short version: mostly trail, always disclosed, never rebated.
This lesson teaches a concept for the NISM Series V-A exam. It is education, not financial advice.
- 1
A distributor is paid a commission by the AMC, mostly as trail: a small yearly share while the investor stays invested.
- 2
Commission must be disclosed to the investor. Hiding it breaks the code.
- 3
Passing part of the commission back to the investor as an inducement, called rebating, is not allowed.
- 4
Because pay is mostly trail, keeping investors happy and invested is what earns over time.
A distributor earns a little each year the money stays invested, so good service and the right fit pay better than a quick sale.
The commission is a trail, a small slice each year the investor stays invested.
You earn while they staySo the money follows good service. A happy investor who stays pays you for years.
Service beats a one-time pushHanding back part of your commission to win the sale, rebating, is against the rules.
No rebatingMostly trail, always disclosed, never rebated. Service is the strategy.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
A distributor is mainly paid through:
Trail commission is:
Passing commission back to the investor to induce a sale (rebating) is:
Distributor commission must be:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.