This thread is on disruption in #Advisory . I am sharing my thoughts and beliefs. I lean on my experience as an advisor and professional. 1/n
Product Selling & #Advisory were jumbled up at the start of the decade. Neither #Advisors nor customers could clearly draw lines. Conflict of interest was high. But, we significantly reduced these in a decade. Now, the system looks set for its most investor centric phase. 2/n
How did this happen? The primary credit goes to our regulation. By removing entry loads in 2009, launching #RIA, forcing all trail revenue models in mutual funds and segregating product selling and #Advisory, #SEBI has achieved way beyond even what investors expected. 3/n
Tech is the significant driver. It has made the process of rendering advice seamless. Today, we can get advice and transact on it at the click of a button. Timelines of advisory cycles have crashed. Ease of operation is higher than ever before. Trail of advice is recorded. 4/n
The #advisory regulatory framework was mostly written keeping the #mutualfunds in mind. Read it & you will find the overwhelming influence of MF investor needs. But, ironically, #advisors registered in large numbers hardly advised on MF's. This needs to change for the better. 5/n
The Most Important Thing which #Advisory framework has achieved through #RIA regulations is a single fee approach. You cannot be charged twice for the same #Advice. So if you have given an advisory fee to create a MF portfolio, you can't be charged a trail commission too.6/n
Creating transparency in fees is a critical progression in both investor awareness & investor protection. Fee disclosure is a first step. Fee computation transparency is the second step. #RIA has ensured both these steps are in firmly place with regular regulatory updations. 7/n
While we made significant progress in streamlining how #RIA ecosystem operates and how the fee mechanisms work, the underlying mutual fund system of direct funds needs urgent scrutiny. Simply put, MF's charge too much under direct. This can derail success of #RIA model itself.8/n
Several #AMC 's charge more in Direct than they must. If we adjust commissions paid under distribution for the same schemes and calculate what must be the cost under Direct, you will find overcharging. This needs urgent redressal by #SEBI. Fees by #AMC must be controlled. 9/n
The investor angle in an #advisory relationship is still evolving. Investors still compare equity returns with FD or #Nifty returns. The risk management skills of #Advisors is secondary to return generation. Investors must take a closer look at risks & how we navigate them. 10/n
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