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Interviews '‘SEBI is willing to help and address all queries of advisers wanting to become RIAs’'

'‘SEBI is willing to help and address all queries of advisers wanting to become RIAs’'

Dilshad Billimoria of Dilzer Consultants shares her experience of being an RIA and why advisers must not be reluctant to adapt to this change.
Banali Banerjee Dec 2, 2016

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

According to the recent RIA consultation paper, calling oneself an IFA or a Wealth Manager will not be allowed (without registering as RIA) after Oct 2019. When the SEBI RIA regulation was released in Jan 2013, we were very clear that we would need to register ourselves as SEBI RIA, since we have been charging fees to our clients since August 2009.   

We are also an ISO 9001 (2015) registered company and hence, most of our processes, framework, guidelines and manuals were already in place. We just needed to device the structure and frame work to apply for SEBI RIA. Our board of directors were clear that we wanted continuity in our advisory practice and hence we decided to go with the corporate model for RIA registration.

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

There is net worth criteria, capital criteria, certification requirements and framework of structure that needs to be looked into which is different for individual RIAs and corporate RIAs. However, this issue is addressed in the latest SEBI consultation paper.

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

There were initially issues on net worth criteria, capital infusion and infrastructure road blocks. Details on business model, future business growth and declarations were some of the discussions we had with SEBI. However, we had answered all queries and met all the criteria. We were able to get our license in September 2014. 

SEBI is willing to help and address the queries of advisors wanting to become RIAs. I feel the roadblock or reluctance sometimes comes from the adviser’s unwillingness to adapt to change for the better.

What are the benefits of registering with SEBI as RIA?

Registering as SEBI RIA will increase the trust factor. Transparency in dealings is highlighted and expectations for both client and advisor are set at the outset at the time of client engagement.

For CFPs, ethics is a basic value they can provide in the advisory profession and is one of the strongest referral points. We have never had to make reference calls or do any cold calling from the day we started working since 90% of our new business comes through existing client referrals. For me, asking for referrals is a way of showing dilution in our service and quality of services rendered to existing clients. When we meet clients, we need to talk about them and not about how they can help us through referrals!

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

Cost of compliance should form a part of the fixed cost of the organization and can be considered in calculating the fee charged from clients. It should be considered more as a check for internal guidelines and once a mechanism for compliance, record keeping advice and book keeping is in place, external compliance becomes just a formality since our internal records are up to date.

It is like paying service tax or updating professional tax with the IT department. There is no choice on this front and similarly compliance for RIAs should be part of the internal processing which happens on a continuous basis.

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

Do it now! You have no choice after three years as SEBI has given enough time and offered clarifications on RIA rules. You cannot say you were unaware or you needed more time.  

4 Comments
SHAILESH MAWANI · 6 months ago
Informative article required more information about procedure to follow, cost involved, for compliance of SEBI which software to be used or they are using
Shailesh Mawani
Ganesh Kumar Gupta · 6 months ago
How can you speak on behalf of SEBI ? RIA is a grand failure so far and SEBI cannot forcefully impose it to destroy the MF industry and leave Crores of Investors at the mercy of gullible banks/RIA's. Regulated commission payment is a much better option especially for small investors. SEBI is even not willing to touch B15 extra pay because it is a grand success. Big investors can always go DIRECT or to RIA. All investors of B15 will not get the helping hands which they are getting through IFA's now. Why don't you implement same model in Insurance sector to have a level playing field ?
HARSHIL ROY · 6 months ago
I agree with Ganesh. The people who are in favour of RIA, please define the direction of SEBI.

They have abolished negative marking in NISM exam so now it's easy to become a mutual fund advisor. You have allowed B15 commission to sell mutual fund. You don't have any control on commission paid to distributors. They have started CPE programme where a seventy year old citizen who knows only how to sign, will become a distributor of mutual fund.

Now you are saying be RIA, don't take commission, take only fees? Why do we do that? Can you match commission of 400 - 500cr commission by taking fees from client?

Request you to decide the direction for mutual fund industry.

Instead do this:

1 Decide common commission structure in terms of percentage on type of mutual fund scheme.
2. Abolish CPE.
3. For new licence or on renewal, make those certification necessary which are there for RIA and let them earn commission and fees both if they can.
4. Ask for record keeping and paperwork from all who is into mutual fund industry, whether a distributor or RIA.


By abolishing commission, you are trying to say that whosoever is functioning based on commission is misselling. This is a serous allegation.

Anyway, if you would impact the commission and force a mutual fund distributor to ask for fees, the whole market will be taken over by insurance as they would earn commission of 20-30% and would not ask for fees.

The people who are RIAs, please understand you people are working with a specific segment of the society. The world is beyond that also.
Reply
SUNIL S BHAGAT · 6 months ago
It is still only a CONSULTtion NOTE. It is not a directive or SeBI order. i DO NOT UNDESTand WHY Cafe mutuaL is publishing the write up of RIAs which is pressurising us to give up our IFA status... Th fact of the matter is that the IfAs have been successful in getting INVESTORS mainly retail into SIP of equity and balanced funds and now an attempt is being made to remove or restrict the role of IFAs when majority of investors are not complaining about the cost factor. Cafe MUTUAL SHOULD ALSO INTERVIEW PROMINANT IFAS REG THIS ISSUE AND PUBLISH THE SAME.
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