In recent years, SEBI created a new category of SEBI registered entities – the Registered Investment Adviser (RIA). The RIA model has proved to be a powerful way to deliver advice. The next transformation in investor centric creating better alignment between investors and advisers. Shyam Sekhar discusses how the new regulations will encourage a more symbiotic growth between advisers and investors and create a system built on trust and confidence.
Talk about the topic ria the way forward new category of semi-registered entities it’s been here for the last five six years and it’s fast becoming a very powerful way for advice to be delivered it has just undergone its next transformation this transformation is clearly investor centric it makes the alignment
Between the investor and the advisor much better how advisors construct their work how they deliver advice and how they are compensated firstly this change in the array regulation will lead to more specialization when we saw the first ria regulation it was principally constructed direct option was also brought in
Clients and advisors to explore a new way of interacting engaging and doing business on the one side the mutual fund industry has not really reduced its total expense ratios in the smaller sized fund schemes regulations allow them to price their smaller schemes better products then that cost tends to get added
Direct option so the advisor and the investor are not helped by how pricing in direct option in the niche products is functioning which means the advisor only has to go towards the larger products which are very big assets basis and even if the advisor gives his very best these products may actually not meet the expectations
Of the investor advisor to raise his level of specialization it is only then that investors will appreciate the role of the advisor is relevance to the the ability of the advisor to translate so the time has come for more specialization which means the advisor now has to clearly the regulation is still
Heavily weighed in an innovative advisor has to move beyond what is happening in the mutual fund space it is time for much more specialization but that still does not reduce the relevance of products as advisors nuance their surveys improve the knowledge base solution which could even be a product it is
Go up advisors will not have the viability smaller client will have to either do it himself good advice there it would not be possible for is my really because there are different not make it viable for the advisor and if it is not viable i think one should simply make a clean break and not do it because
What you do should be viable for you and you should be able to give a good solution for the client otherwise both are going to be unhappy so which means that the threshold is going to definitely rise so only larger clients will work with advisors and the smarter advisors will work only with the larger clients in
Conclusion the relationship between evolved it’s going to be far more long lasting they need to journey together from where they begin to the place where the investment goals by the investor are all achieved one by one and provides more than ample benefits to the investor who places faith in the ra
Then it is going to be one where the products essentially we are heading towards a phase where the ra ecosystem will get progressively better mutual fund ecosystem refuses to fill at this point in time be a system that stands out for trust and confidence thank you for watching this podcast
Transcribed from video
Registered Investment Adviser – The Way Forward | Shyam Sekhar | ithought Advisory By ithought advisory