SEBI to revisit exemption provided to MF distributors to register as RIA

*SEBI's consultation paper on IA regulations*

In crux it means that, advice is incidental to MF Distribution which cannot be permitted & IFAs must become RIAs if they want to continue advisory practices.

*What it implies?*

A) IFAs = Transaction Based Model
B) RIAs = Advisory Based Model

*History of SEBI*

1) Bring Consultation Paper
2) Take Public Opinion or Feedback
3) Make Minor Amendments
4) Implement it

_*Stakeholders/ IFAs opinion does not matter as their stand is not united.*_

*Impact if implemented*

1) Finish transaction based model & bring advisory based model & give them 3 years window.
2) Commission based model should not remain.
3) Fee's based model should be the only model.
4) Scale up your business in 3 years & make it viable.
5) Either be a pure distributor or be an advisor.
6) Small IFAs can pool up & see if alliances can work on grounds of shared thought process & common vision.
7) Small IFAs have to upgrade themselves & their business models or else become sub-brokers with big established players or NDs.
8) TERs will be much lower as compared now going forward which is SEBI's long term goal.
9) Commission model can exist but will be very much lower & not viable business model.

*Now, what shall we do & how shall we?*

A) To consider our own action plan & strategy.
B) To see our business model & make it viable.
C) To accept & deal with the challenge in an amicable manner.
D) To join hands on PAN India basis with an association like FIFA & have a perfect platform.

*Finally, call is yours not of others. We hope it gives you a clear idea. Let's deal this situation together with open minded approach, as united we stand & divided we fall. This divide amongst IFAs is actually drowning us. Now, let us swim together or we all will drown. This divide is already drowning us since long.*

*Warm Regards,*
*Varun Vaid*

*SEBI's consultation paper on IA regulations*

In crux it means that, advice is incidental to MF Distribution which cannot be permitted & IFAs must become RIAs if they want to continue advisory practices.

*What it implies?*

A) IFAs = Transaction Based Model
B) RIAs = Advisory Based Model

*History of SEBI*

1) Bring Consultation Paper
2) Take Public Opinion or Feedback
3) Make Minor Amendments
4) Implement it

_*Stakeholders/ IFAs opinion does not matter as their stand is not united.*_

*Impact if implemented*

1) Finish transaction based model & bring advisory based model & give them 3 years window.
2) Commission based model should not remain.
3) Fee's based model should be the only model.
4) Scale up your business in 3 years & make it viable.
5) Either be a pure distributor or be an advisor.
6) Small IFAs can pool up & see if alliances can work on grounds of shared thought process & common vision.
7) Small IFAs have to upgrade themselves & their business models or else become sub-brokers with big established players or NDs.
8) TERs will be much lower as compared now going forward which is SEBI's long term goal.
9) Commission model can exist but will be very much lower & not viable business model.

*Now, what shall we do & how shall we?*

A) To consider our own action plan & strategy.
B) To see our business model & make it viable.
C) To accept & deal with the challenge in an amicable manner.
D) To join hands on PAN India basis with an association like FIFA & have a perfect platform.

*Finally, call is yours not of others. We hope it gives you a clear idea. Let's deal this situation together with open minded approach, as united we stand & divided we fall. This divide amongst IFAs is actually drowning us. Now, let us swim together or we all will drown. This divide is already drowning us since long.*

*Warm Regards,*
*Varun Vaid*

I have till date not understood the kind of regulations that SEBI is trying to implement. On one hand the technology is being made such that the customer is being lured to use the online portals of various MF's to invest and direct plans are being promoted. On the other hand regulations after regulations are being put on MF distributors. What is the objective of this.

If the objective is to ensure that only the well qualified and distributors with true understanding of MF's operate in the market, then just making the entry level requirements more stringent will do the job.

I am an MBA in Marketing & Finance, have over 13 years of work experience working in the field of MF's , hold a CFP CM, have cleared all the NISM requirements and all that i need to do every year, 3 years of 5 years to take more exams. Renewing your ARN is as simple attending a CPE refresher course.

By making so many regulations of IFA, RIA , increasing the Registration fees, putting commission paid on the statements, Online business, MF being sold by e-commerce sites etc etc you are basically making the landscape difficult for retail business... the one gap that needs to be addressed is the knowledge, and that no one is bothering to address to.

No education of the clients is also being done by SEBI to make them agreeable to advisory based models. Clients are still not comfortable paying fees for the advise offered and SEBI expects to change this mindset in a span of 3 years, by putting regualtions which are already proving to create retail penetration gap. Quite sad it is.

I totally agree with Deeptiji. This kind of guidelines would force distributors to stop business & divert to some more remunerative business. Sebi should be more concerned to save the industry from any unethical practices & safe guard the customers interest without unduly creating hurdles for the distributors.

With commission pan India penetration is less than 5%. With commission who will sale products and Educate and guide them ?

Take the case of National pension schemes, who are selling their products? What they achive sofar must be consider.

I TOTALLY AGREE WITH DEEPTI & BHUPESH - FOR THE LAST FEW YEARS SEBI IS ACTING IN A WAY THAT SMALL IFAs WILL RUN AWAY FROM SELLING MUTUAL FUND PRODUCTS - ONLY BIG BROKERS & THE TOP PEOPLE WHO RETIRED OR TOOK VRS FROM BANKS & FUND HOUSES WILL START ADVISORY BUSINESS AND BECOME THE SOLE SELLERS OF MUTUAL FUNDS - ITS GOING TO BE A BIG "COSY CLUB" - WE HAVE TO FIGHT IT OUT AT ANY COST - 1) WE HAVE TO STOP SELLING THE MUTUAL FUND PRODUCTS FOR 3 MONTHS AND 2) WE SHOULD ASK ALL OF OUR CUSTOMERS TO WITHDRAW FROM MUTUAL FUNDS - ONLY THEN SEBI WILL COME TO SENSE

Within 3 years from now, SEBI will also bring out a paper and regulation saying RIAs are earning too much and will try to limit that as well. I am shocked at this vindictive attitude by an organisation that has its own employees getting fat salaries and pensions as government servants, yet grudges the stakeholders of the business it regulates from earning a decent livelihood in every possible manner. I for one fail to understand the logic of conflict of interest, because all of us, businessmen or employed, recommend as an obvious choice, whatever affects our livelihood . The CEO of TCS, for example, is not going to recommend a competing Infosys product, so what makes his recommendation different from an IFA, as the recommendations of both are influenced by the fact that they derive income from those products ? Th mutual fund industry seems to be one where we have maximum government interference, without a grass root understanding of the business. It is a soft and easy target, as SEBI has failed to revive important areas like the direct equity and retail debt markets, both of which need far more attention.