We spoke to a few advisors on what changes they foresee in an advisory business in the year 2020. Among some trends that they foresee are increasing number of RIAs and diversifying offerings.
Here is what they have to say.
Erik Hon, Managing Director, iFAST Financial India
Number of RIAs will go up because of ban in upfront commission. Also, SEBI is likely to bring more clarity on the difference between mutual fund distributors and RIAs. Many people who are in wait and watch mode would then take a call to become fee based advisors.
Secondly, we will likely to see more consolidation in online distribution space. While the fintech distributors like Paytm will continue to grow their customer base, viability of such a model is still questionable. Last year, we have seen some consolidation in the online distribution space. The trend will continue this year. Finally, more IFAs will join hands and professionalise their practices to reduce costs and grow business.
Vinod Jain of Jain Investment, Mumbai
In my view, advisors will face more difficulty to convince their clients to stay invested. Last year, despite market rally, most funds have not performed. The trend will continue this year amid fear of continuous economic slowdown and negative commentary from the RBI. I think many advisors will increase their offerings by adding new products like PMS and AIFs to increase their income.
Sadashiv Arvind Phene, IFA
I believe that non-serious IFAs will exit the industry. This could happen due to declining commission, underperformance of most equity funds and risk of credit defaults by large companies. Another possibility in the advisory space would be consolidation of advisory business to reduce costs.
Anup Bhaiya of Money Honey Financial Services, Mumbai
IFAs will increasingly use technology to improve operational efficiency in 2020. Also, I think IFAs who are not on social media today will use these platforms to acquire new clients. IFAs will offer goal-based services to clients such as retirement planning and tax planning.
Anupam Guha, Head of Private Wealth Management and Equity Advisory Group, ICICI Securities Going ahead, technology will play a vital role in the advisory business. Digitization of advisory will be the new trend wherein the customers will seek customized advice on a digital platform. The quality of advice would get better and advisory cost might come down.
Ashish Modani, SLA Financial Solutions, Jaipur
I believe many new investors are likely to enter the market through mutual funds due to increasing awareness and rising population of millennials. Thanks to volatile markets, these investors are likely to seek advisors help to invest in mutual funds.
I think IFAs have started focussing on strengthening their operations and building strong team to grow business.
Sudhanshu Sekhar Mohapatra, Subham Capital, Bhubaneswar
Fund selection will remain a major cause of concerns for most IFAs. Over the last two years, mid and small cap funds have delivered negative returns while most categories of debt funds have disappointed investors. Hence, IFAs would be seeking quality research reports to give good fund recommendations to clients.
