Going by Natixis’s latest survey, even advisors in developed countries believe that fee based advisory model will left retail investors unadvised.
The Natixis’s latest survey says that eight out of 10 advisors believe that the fee based advisory model could limit access to financial advice for clients with low-ticket size. Natixis is a France-based asset management company.
Although the study did not include India, the findings seem relevant in the Indian context too. Over 2550 advisors across 15 countries responded to the survey.
Since most of the developed nations are mulling over the implementation of fee based advisory service, advisors expressed reservations about the implications of these regulations for individual investors. “More stringent regulations could limit access to financial advice for lower balance and mid-tier clients.”
In addition, many advisors believe that heightened regulation and disclosure requirements are challenging to the growth of their business. These advisors say that increased regulations and cost of compliance could even lead to higher costs for clients.
Answering to the question, ‘what if the respective regulators do away with commission model to implement fee based model’, seven in 10 advisors say that they will make at least some changes in their business model. Close to 48% advisors feel that they will need to completely change their business model to sustain business growth.
While 38% advisors say they will stop dealing with low-ticket size clients, 29% plan to increase the use of passive strategies for such clients. Similarly, 12% advisors say they will outsource a portion of their investment management to comply with the regulations. Surprisingly, 9% of advisors plan to quit advisory business.
