What preparation did you do to register with SEBI as RIA?
Considering that we used a predominantly financial planning led approach with most of our investor families already, there was really not much preparation to be done. Since we went in for a corporate registration, there was a need to create a SIDD (separately identifiable division) for the purpose of delivering investment advice. Some of our processes also needed some fine tuning to meet regulatory requirements.
Is the process of registering complex? If yes, what difficulties did you face?
It was very smooth, with the regulator willing to answer queries that we had over the phone.
What ambiguities/roadblocks did you come across in SEBIs Investment Adviser Regulations?
There were a few roadblocks like setting up a separate division, ensuring compliance of all advisors with the regulation 7 of SEBI IA (Investment Advisor) rules, regarding certification and qualification of advisers, and communication with teams as well as clients about the enhanced need for compliance.
What are the benefits of registering with SEBI as RIA?
The SEBI RIA licence clearly differentiates you in the eyes of both clients and internal stakeholders that as advisory firm you are clearly acting in the client's best interest, as you are voluntarily registering as a RIA. As the RIA is subject to strict adherence to many important aspects of advice such as risk profiling and suitability assessments before advising clients, these become the quality standard aspects of your advice.
What are your views on the cost of compliance with SEBI’s RIA rules?
The cost of compliance is there even for IFAs and MF distributors as AMFI has similar rules for risk profiling and suitability assessments before advising clients, so investments in compliance systems and processes has to be done, and therefore that is not much different as a RIA.
Is it feasible to sustain an RIA model only by charging fee?
I think it is feasible to sustain only by charging fee as now the regulator has also allowed to take direct plan feeds.
What would be your advice to IFAs who are considering registering with SEBI as RIA?
We believe that registering as a RIA is a great way to communicate to your clients that your advisory business is run in a fiduciary format. And if an IFA believes in showcasing that to his/her clients then registering would be a good option. Also, the proposed period of three years would be sufficient for advisors contemplating to make the shift from commissions to fees, as that is good amount of time, to make a smooth transition.
