I am newly registered mutual fund advisory holding valid arn no. and also lic agent not started working yet is i can apply for IRA qualified NISM Exam please guide

Why it is assumed that distributors are not good advisors and all good advisors are not be good, if they are distributors. They should make it obligatory on make it very clear on face of the bill. In the first engagment letter, the client need to be told about the fees to be received from him and to be received from AMC or any other product. Advisory role is a role of responsibility and faith. By separating it clients are forced to have two separate people. I feel illogical

Please clarify whether a partner of a partnership firm who does not posses ARN in his own name and has passed CPFA can register as RIA and on other hand, his partnership firm with an arms length can provide distribution services or not? Will it be legal?

I understand the need for regulating the market , so that the blacksheeps are removed. Why cant we have a special accredition rating based on qualification and experience ? If SEBI wants , they can introduce a form of accredition which will distinguish some from others in terms of their abilities. Investor can decide where to go. Is it possible to sustain oneself as an advisor only ? Why cant we leave it to the investor to gauge the efficiency of the distributor and decide whether it is worth taking his advise or not . A simple workable model is what we want. A typical Wealth Advisorr would deal with multiple assets and not only MFs ( like Primary and Secondary Bonds , Corporate FDs, etc., ). Maybe , he will charge as an advisor for his MF advise and be a distributor for all other assets . What about Bank Wealth Management team ? Would they only charge for their advise and ask the client to go elsewhere to execute the advise.

I have a general question like How many CFPs in India are making a living out of only Fee income? Is it 100 or 50 or 10? I have no answer for this but what I know is there are about 50 CFPs in Andhra Pradesh (for 9 crore population) in which about 10 CFPs are actively practising and in which only 1 CFP is earning decent revenues by Fees only. Other practitioners have distribution income to supplement the fee income. If SEBI regulations be complied and register as RIA in current form, only that 1 CFP will practice financial planning and all others will opt for distribution only. This is like a death knell for CFPs and financial planning profession. Even in U.S as per survey done by College of Financial Planning in 2011, there are 17% Fee Only CFPs, 60% Fee+Commission CFPs, 7% Commission Only CFPs, 9% Salary Only CFPs, 3% Salary+Fee CFPs and 3% Salary+Commission CFPs. In fact, as per survey, Fee Only CFPs have reduced from 30% in 2008 to 17% in 2011. It is a failure there!

Part 6 - If you talk to a behavioural expert, she may laugh at the whole idea of making paid advice compulsory to the consumer which is what IA regulation is trying to achieve. People go to a Doctor only when they are sick. They don’t go to a Doctor to get a paid advice that walking is good for health. Also, please change your 1000 words limit rule. In any case your 1000 words is not actually 1000 words.

Part 5 - Since there is no economic sense, advisors will now stop talking about financial planning etc. and just do distribution sans frills. Thereby public interest will be protected. Few stars anyway will shine using IA regulation. Even now it is not too late. Instead of feeling hurt and before trying coercion, let the regulator stick to the registration + exemption regime for next 2-3 years, provide required clarification about exemption and concentrate on educating the consumer. Let the consumer decide what is good for her. The moment the advisor sees an economic benefit, she will line up in front of SEBI’s office to get the registration.

Part 4 - SEBI as usual is not listening to the ground reality. It can make any regulation to strangle meek and already listless mutual fund distributors and non-starter financial planning profession under IA regulation. FPSB has been able to add only 1700+ CFPs since 2004. Take out from that number the people who got the designation as another certification or qualification and the number of actual practitioners is reduced further. Will SEBI ever be able to make people pay for advice? That is not the job of a regulator I suppose.

Part 3 A stock exchange member broker distributes mutual funds, can collect brokerage charges on both legs of the transaction. How SEBI can stop other mutual fund distributors (mainly hapless IFAs) from collecting upfront commission? If there is no level playing field, banning upfront commission on mutual funds alone will lead the industry nowhere. Then, what is supposed to be a retail product will become only a special category product available through stock-exchange brokers. All that is needed is to force 20000+ active mutual fund distributors either to become IAs or to become stock exchange members.

Part 2 Entire financial products intermediation atmosphere is vitiated because the purpose of exemption is not clearly made out. Mutual Fund regulation is also not in alignment with IA regulation. There is a clear mandate by the same regulator under mutual fund regulation to allow distributor to collect upfront commission from the clients. Only the quantum is left to the discretion of the investor. This clause has not been rescinded through IA regulation.

Part 1 Hesitation among the advisors to register clearly gives out the message that advisers are not sure of economic viability of regulation. SEBI is not new to failed regulations. Collective Investment Scheme is one such glaring example of unused regulation. SEBI official in the IFA Galaxy forum talked of consent from RBI and PFRDA to the IA regulation. He also spoke how Bank RMs should be covered under IA regulation. But there is no circular on that aspect from other regulators. Having failed to convince a regulator to bring ULIPs under its purview earlier, how is that SEBI is talking again on behalf of other regulators now?

GOOD ARTICLE. BUT I HAVE SOME QUESTIONS? 1)IF CLIENT ASK FOR ANY ADVICE,LIKE WHICH FUND TO SELECT, THEN WHAT WE WILL SAY TO CLIENT? GO FOR ONLINE SEARCHES OR AMC FOR WHICH PRODUCT YOU SHOULD INVEST IN , BECAUSE IF I RECOMMEND SOME PRODUCTS MAY I BE IN PROBLEM? 2) MF DISTRIBUTION COMMISSION ARE REDUCING DAY BY DAY, HOW MANY OF YOU ARE ABLE APPLY FOR NEW LICENSE AT YOUR OWN COST? 3)IF WE APPLIED FOR RIA THEN WHO LL GET THE COMMISSION GENERATED BY RESPRCTIVE ARN

Can some one be (A) advisor for one set of clients only charging for advice without any distribution commission and be (B) distributor for another set of clients (without any overlap) charging nothing from client but accepting AMC commission ? There is no conflict of interest in this case. But SEBI is not clear about this situation. There was a question posed to SEBI ED in the IFA Galaxy summit. That is if one spouse is distributor and another one acts as advisor, does it solve the conflict of interest issue, SEBI is talking about ? How different it is compared to same person being advisor and distributor ? Also there were several questions raised on incidental fees. They were not answered clearly.

It is a very important issue of seeking clarity of the clauses in the SEBIs directives, that has been discussed over here. Unless and until the majority of investing public become fully aware of and are made to move over to the Fee-based advisory services, IFAs like me, will not be ready to forego whatever distribution income that is flowing in now, for the AUM being administered by us. Trail Only is also fine. In fact, Public Awareness can be achieved with the same Regulatory mechanisms available with SEBI.

Can SEBI, or any other regulation let us know once and for all as to how many licenses we need to carry on Business? We sell insurance after IRDA Exam. We sell mutual funds after NISM exam. Then why do we need so many licenses from these people who just create more licenses all the time?

I would like to offer my opinion in two areas - 1. If one does not charge a fee for advice/ financial plan do they have to register as ria? The point at issue is advice, not fees. Hence if someone offers advice there is a advisor client relationship which is established. Hence they will have to register as IA. If it is incidental advice then it would not be required. 2. What and how can incidental advice be quantified? Incidental advice is something that is coming up while going about the main business. If the main business is MF distribution and one advices the client on fds too, I guess it would be incidental advice. Incidental advice would not be measured by quantum of revenue garnered from incidental business. It will be the principle, which Sebi would observe more keenly.

The regulator can even make it mandatory for all ARN holders to get registered as an RIA, leave the option of deciding his revenue stream from Fee or Commision or Both, but with stringent disclosure norms. Im confident the numbers, no doubt would go up from the current 70 to 1000s. If this is not the case the only other way in which an RIA would earn revenue is, by billing the client and making his investments as "Direct" and bill him for the savings made by going "Direct". How would this change the investors interest? This would only make AMCs more profitable!!! Further this would lead to unfair trade practice, which ultimately would affect the investors interest. As our market stands today, the need of the hour is encouragement for the existing community and strict disclosure norms to protect the investors interest. Lets welcome RIA with some modified norms to accomodate both Fee and Commission.

The regulators intention is very clear - Anyone dealing in capital markets or capital market related products should come under the purview of SEBI. Registering with SEBI and compling with the rules laid down would definetely regulate and bring sanity to the industry. The biggest question is why should there be a choice between Fee and Commission ? why not both? Look at the current situation out of 1000s of active ARN holders only around 70 have registered as an RIA. Does this number convey something? Or is it that majority of the distributros are not keen to become an RIA under the current terms? An RIA, with all the disclosure norms and compliance procedure, if deems necessary to charge a fee from the client for the kind of work that he has put in why should he be denied of the commission income, which he is already disclosed to the client.

Reform is good, but simultaneously it should be lucid so that maximum IFA can register themselves, net worth of 25 L is an issue. IFAs are facing uncertainty and need cooperation.

We IFA, at least 250 odd I am in touch with (All with AUM 20Cr + to 100Cr) are any way looking for alternate businesses and not very keen to build the business as we were earlier (Dwindling passion due to loosing asset and revenue due to Direct, Increase cost due to inflation and regulations, low or no interest from clients) Article like these only motivate us to only increase our effort on diversification. Please do one survey (you are very good at it) on how many IFA are lest out of total. Now after debt carnage! How many of the left ones are still dedicated to this business how many are still building their SIP book etc and so on! You and industry will be really surprised by the outcome!

Hi, I just want to know 1)If the person is CFP and surrender his/her ARN then does he/she to register as RIA? 2) If the MF agent is charging a fees under any head (eg. Annual Trasaction Fees etc) for the expense done for a client service, Is he has to register as RIA? Looking for a comment on this by you and your reader.

As an ARN holder, the biggest risk we are managing is not investment risk but regulatory risk . Now the only thing that remains is cancellation of our ARN registration. What is there to covet about being an RIA? When anyway, it is far more rewarding to be an investor. than to be an investment adviser.

I am personally having the view that perhaps SEBI is having a vision of seeking a mature climate in the advisory area, but, our community, as well as the investor has not grown up to the maturity level, where such crisp rules can be followed in a healthy manner. In the absence of clear directives,the IFA is very shaky about the outcome of having an RIA license. Urge the SEBI to come out with more clarity.

@ Ram SEBIs investment advisor regulations have clearly mentioned in the notification as "investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of these regulations" You dont need to worry about it.

What is this and who will effected, and how, how to curve with this problem? I cant understand day to day change in this industry, it will good all rules and changes should be implemented and addressed in single stretch .

What about all those people who give advice to investors in newspaper Q-A columns etc without being a distributor or advisor....

Hi All, It was nice to see the details version both side, to me main reason for low application is not clarity but the Net wroth of 25L , As I was speaking with many IFA/CPFs recently in these market it is difficult for people to get stuck money 25L , I am sure if they reduce the Net worth number of application will multifold