In India, the financial services franchise is growing to be a popular way to earn money, whether part-time or full-time. You do not have to build your own brand from scratch; rather, you partner with a broker who has an established presence as an Authorised Person (AP) through the broker's platform and brand identity.
Generally, an AP franchise is a great opportunity for individuals who have a keen interest in discussing financial markets and planning for long-term wealth accumulation. Especially for new and developing cities such as Tier 2 and Tier 3 cities, an AP franchise will be very beneficial because investors here tend to prefer working with local experts who can explain investment options in a simple manner.
Let’s understand what an "AP" is, how it works in India as a financial services franchise model, and all about it here.
Who Is an Authorised Person (AP)?
An Authorised Person (AP) is a designated representative or partner of a SEBI-approved stock broker who services the broker's clients using the broker's trading platforms. The usual roles and responsibilities of an Authorised Person (AP) operating under an AP Franchise Include:
- Facilitating the onboarding of Investors by allowing them to open Demat and Trading Accounts with the stockbroker.
- Providing an explanation of basic products such as Equity, derivatives, mutual funds and other products offered by their Registered Stock Brokers
- Assisting investors with KYC (Know Your Customer) and documentation, as well as navigating through their trading platforms.
- Assisting investors in the process of placing orders, as well as teaching them how to do it for themselves.
- As the local representative for the broker's clients, the Authorised Person acts as the primary point of contact for the investor regarding services, reports, and statements.
Why Partner as an AP? (Benefits & Opportunity)
Becoming an Authorised Person is one of the simplest ways to enter the stock market business- especially if you’re starting out. Take a look at how:
Lower entry barrier compared to a full broker setup
New entrants to the brokerage industry will generally not have sufficient capital or the infrastructure needed to fully establish themselves in the capital markets. However, by establishing a registered partnership, new entrants typically can establish their brokerage relationship at a much lower cost than establishing a full-fledged brokerage.
Use of an established brand and platform
In addition, you will have the ability to promote your brokerage through well-established brokers and utilise their Trading app, websites and research tools.
This gives customers much more confidence when doing business with an established name and brand versus an unknown and unproven entity.
Income linked to trading activity
Typically, as an AP(Authorised Person), a share of the brokerage or revenue generated from your clients’ trading activity provides you with your income. Your earnings will eventually rise as your clients' trading and investing activity increases.
Flexibility in working style and location
Many APs work from small offices or even from home, and this method of working appeals to people who want to explore an opportunity to build a financial services franchise in India.
How to Become an Authorised Person (Step-by-Step)
If you are interested in starting an AP franchise for Indian clients, it is best to break down the entire process stepwise.
Choose a SEBI-Registered Broker/Model
Determine which brokers offer the AP franchise that you are interested in and what their reputation, platform quality, range of products available, and revenue-sharing model looks like.
Confirm eligibility and financial commitment
Most brokers require that you meet
- A certain age (usually 18+)
- Educational minimums (usually 10+2)
- And have a clean financial/legal history
Prepare documents and submit an application
Most AP franchise applications require you to provide
- Proof of identity and residence (PAN, Aadhaar, photo, proof of residence)
- Education details
- Banking details
- And, in some instances, copies of any business registration documents
Complete verification and sign the agreement
Brokerage firms and exchanges will usually verify your application and perform any background checks before sending you an agreement that will outline your responsibilities, roles on the brokerage platform, and your revenue-sharing arrangement.
Get the AP code and start onboarding investors
Once you have successfully completed these steps, you'll receive a unique AP code (or ID) from the brokerage, as well as access to the back-office and partner dashboards to begin bringing in investors to the AP system.
How Choice Connect Supports Your AP Franchise Journey
Choice Connect was created to allow Choice business associates and APs to work collaboratively in India to build financial services franchises on behalf of the partners. APs with Choice typically work with retail clients and handle client acquisition, onboarding, and relationship management. Choice Connect provides
- The trading platform
- The research capabilities
- And back-office support for APs
For many new APs, Relationship Managers (RM) assist with client mapping and the backend processes, as well as assist in addressing any issues that an AP may encounter. This support is often especially useful during the first few months after starting an AP franchise.
If you would prefer a lighter load at the start, you could start as a Choice Business Associate, primarily assisting retail investors in opening Demat accounts, and then transition into an AP role once you experience greater comfort.
Is an AP Franchise the Right Financial Services Franchise?
Selecting an AP franchise in India is influenced by a few personal factors, such as:
- Your level of interest (or knowledge) regarding the financial markets
- Your comfort level in addressing and dealing with the needs of the investment community
- And the amount of time that you are willing to devote to this effort.
The route of forming an 'AP' will place you somewhere in the middle: you will have more responsibility and opportunity available than would generally be offered under the Pure Referral Model.
However, you will have lower capital investment and complexity related to your operation than what would typically be associated with becoming a full broker. If you like to explain concepts using simple terminology and stay abreast of current developments within the financial markets, and view this as an opportunity to establish a business or establish a local investor base, then establishing an AP Franchise may be a viable option.
When you partner with an ecosystem like Choice Connect to make the process smoother and you are able to minimise distractions and concentrate on what is really important: helping your clients and building long-term relationships with them.
FAQs
1. What is an AP franchise in the stock market?
The AP franchise in the stock market refers to the Authorised Person model that connects you with a SEBI-registered broker to represent them as a local.
2. How is an AP different from a sub-broker?
The major difference between an AP & sub-broker is that the sub-brokers were earlier registered directly with SEBI, whereas Authorised Persons are approved by stock exchanges through SEBI-registered brokers.
3. How to become an Authorised Person with a stockbroker?
To become an AP, you need to select a SEBI-registered broker, understand the terms of the AP franchise and complete an authorised person application form that includes your KYC & business information.
4. How much can I earn from an AP franchise?
There is no fixed income. Earnings from the AP franchise are based on the number of clients you onboard, the volume/frequency of trades done by your clients, and the share of the revenue percentage.