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Interviews ‘RIA registration enhances your credibility as an adviser’

‘RIA registration enhances your credibility as an adviser’

Jayant Vidwans of Chaitanya Financial Consultancy shares his experience of being an RIA.
Banali Banerjee Nov 2, 2016

What preparation did you do to register with SEBI as RIA?

There was not much preparation needed. I met all the SEBI requirements in terms of experience and qualification. As an individual RIA, the total net worth required was Rs.1 lakh and I was eligible to register as RIA.  

Is the process of registering complex? If yes, what difficulties did you face?

The process of registration is simple for individual advisors. I did not face any difficulties as a co-ordinator from SEBI helped us with the registration process. I got the registration certificate within 25 days of applying.

What ambiguities/roadblocks did you come across in SEBIs Investment Adviser Regulations?

There are many grey areas. For instance, we have to get the compliance audit done either from a CA or CS. SEBI does not has any specific format for this audit. So every time we have to work on a different format. Hence, I would request SEBI come up with a common format for audit.

What are the benefits of registering with SEBI as RIA?

People start recognising you as a trusted adviser. Just like doctors and lawyers are given a license, RIA registration enhances your credibility as an adviser.

What are your views on the cost of compliance with SEBI RIA rules?

I got the RIA registration certificate in 2014. The compliance cost is justifiable as it includes annual audits which is done by SEBI.  

Is it feasible to sustain an RIA model only by charging fee?

In my case, some clients are reluctant to pay fees. So yes, it is certainly not feasible for an RIA to sustain only on fees. Hence, I have a distribution entity as well.

What would be your advice to IFAs who are considering registering with SEBI as RIA?

I guess no one will label you as ‘bad’ if you are a distributor.

I have been conducting training programs for CFPs and I advise them to adopt the RIA model otherwise the CFP qualification would not have any worth.

Alternatively, different models can come up. For instance, distributors can tie-up with a few RIAs who can take care of advisory service.

18 Comments
Venkats · 2 months ago
You may think that you are on par with Doctors and lawyers but Ground reality is their profession is client or Patients are forced to meet them . Here the situation is different, so please do not compare with them.
sandeep parasrampuria · 2 months ago
why CFP qualification have not any worth ? In my opinin if you do CFP then you can also registered with sebi as RIA and also retain your distribution business .What I heard about this may be correct because many of person are contacting to us for online CFP cource.
Sanjib kr. Datta · 2 months ago
I want to know that 5 yrs experience certificate from Lici , it is allowable to get RIA from sebi.
Premal · 2 months ago
Excellent Post. Apart from CFP, one can also clear the NISM IA XA & XB examinations to apply for RIA registration. We at Edge provide 13 full days (8+5) classroom training support to partners empanelled with us on weekend mode. The training is provided completely free of cost. Pls contact your RM for complete details or email at premalpipalia@gmail.com
Dhawal Sharma · 2 months ago
Self glorification story...In actual life, 99% of the CFPs are having code of LIC and MF ARN number..They write these stories just to massage their ego...Its a dream world which they think will dawn in India..Let them be happy in their IVORY TOWERS :-)
Sanjay Doshi · 2 months ago
well said
Manglam. G. Iyer · 2 months ago
Well said.
Reply
Shailesh Sampat · 2 months ago
" it is certainly not feasible for an RIA to sustain only on fees. Hence, I have a distribution entity as well." As per proposed norms To keep distribution is not possible for individual RIAs for that you have to establish a firm and take corporate RIA registration with huge establishment cost or do it with your family member's ARN.
AROON PUROHIT · 2 months ago
HOW MUCH ANNUAL COST TO QUALIFY AND LICENCE RENEWAL FEES EVERY YEAR
Rashmikant K Ashani · 2 months ago
It sounds like all planned stories which are fed from somehwere
Arjun · 2 months ago
This whole article is self-defeating . How can one become an RIA in true essence and at the same time establish a separate entity for execution ? How can one 'tie-up' with an execution platform or service provider ? Does this not go completely against the whole reason for ensuring that advise is not tied into distribution commissions ? These rules will result in added cost of compliance for RIAs, drastic fall in revenues to IFAs . Eventually they will not be able to service clients and investors will be left to get unqualified advice from friends and associates and sales staff of AMCs. The investor will lose more money in the bargain and SEBI will have to go back to the drawing board after having done irreversible damage.
SANTANU GUHA · 2 months ago
What is the basic logic of introducing the RIA model.What purpose it is going to serve after all.So much is being talked about RIA but at the end of the day the investor is not going to ask whether you are a RIA or MBA qualified advisor.If you want to implement this model implement it across financial services including Insurance,postal,mutual fund etc.etc.
Krishna · 2 months ago
Sir,
1. You have mentioned that you are an individual RIA and also mentioned that you also have a distribution channel. How is it possible for an individual to run both business.
2. You have suggested that IFAs to become RIA, but you have mentioned that only RIA model doesn't work. Then what is the solution.
3. Trust factor will not come from your designation, it will come from your practice and by way of life. A distributor also can be a trust worthy person. There is a general tendency to blame the distributor once a person become an advisor.
4. If you are a fee based advisor and start charging, how will you handle retail investors who invest only a small amount through SIP, should we ignore them. Also it is near impossible to collect fee in small cities.
Sudipta Sengupta · 2 months ago
I am an IFA since 2015. However, subsequent to this I have been working as an LIC agent since 1994. I am not a graduate (H.SC),but can be a CFP/NISM XA & XB. Wonder if I would be eligible to apply for RIA. Any suggestions!!
anthony pinto · 2 months ago
It is really very interesting to read every one's opinion but everything said and done every person who comes to the seat of power would like to make his presence felt in the right or wrong way. Lets go back a few years total commission was abolished what happened to the industry?, then T15, B15 was introduced WHY?. It is difficult to have a fool proof system in any field, if a person whose is an RIA can have a distribution arm also then it is better to introduce RIAD (REGISTER INVESTMENT ADVISOR AND DISTRIBITUOR), and allow him to oprate both in a very convient manner. Right now the number of RIA's are less so they can talk today so many things but tomorrow when every one is an RIA then again Malpractise will start in order to survive
Mohan Athavale · 2 months ago
Can RIA DO BOTH THE ACTIVITIES? ADVISE AS WEL DISTRIBUTION OF FINANCIAL PRODUCTS. What are the fees to apply for RIA? WHAT DO YOU MEAN BY YOU HAVE AN DISTRIBUTION ENTITY?
Bharat Parikh · 2 months ago
Can any individual mutual fund distributor become RIA. Please advise
vIPUL KAPADIA · 2 months ago
I have vast experience of all investment products for more than 18 yrs , I started my own business as a investment consultant from last two and half years .I also feel that RIA is necessary at the same time i feel , distribution of investment products is mandtory .You cannot diffrentiate between both of them .

We want to increase our mutual fund penetration day by day , as it is one of the best investment avenue in the market today . We are into serious business of advising clients as per their need , so for this process
both the practices ie to be a RIA AND DISTRIBUTOR is necessary.
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