Rajiv Bajaj, Chairman Bajaj Capital has said that his company has requested SEBI to introduce a new mutual fund plan called advisory plan or RIA plan. If introduced, this plan would be cheaper than the existing direct plan.
Sharing the rationale behind this recommendation, Bajaj said, “Currently direct plans are not rightly priced. Ideally, these plans should not include any expenses other than fund management fee and administration costs. Currently, these funds charge for servicing costs and other expenses. SEBI should remove these heads in advisory plan to make it attractive for investors. However, such plans should be meant exclusively for RIAs whose revenue model is based on fee. Clients do not mind paying a fee if he sees value in your service.”
He further said, “In my experience, clients like transparency. We disclose our commission to the client and they are comfortable with it. In fact, some clients ask us to charge fee from them considering the services we provide,” he said.
Rajiv told Cafemutual that they have recommended this to SEBI in January and are awaiting a response. According to him, RIA model can only pick up once the market regulator introduces such plans.
