In recent years, many retail (small) investors have started seeking advice actively from financial planners. With the regulatory changes regarding expenses of various products such as insurance and mutual funds, and introduction of many new products, they have to be constantly on their feet or be very well informed to take advantage of a situation.
Another important development in the past decade is the growing importance of equities in one's portfolio, due to rising inflation.
Financial planners, on their part, have to keep reinventing themselves on a regular basis, to ensure being able to charge a fee. Many have been coming with innovative models, too.
At a recent event, Suresh Sadagopan was making a presentation to fellow certified financial planners (CFPs). He told them they needed to move all their clients to direct mutual fund plans, to withstand competition from start-ups who are disrupting the financial space. The suggestion did not go down very well with the audience of around 20. Many said this would result in significant loss of commission, the bread and butter of many financial planners. Some said that while direct plans may benefit clients, most of the latter prefer a commission-based model, as they don't have to shell out anything upfront. Clients, they said, are fine if the planner earns Rs 2 lakh on a corpus of Rs 3 crore through commissions but convincing them to pay Rs 1.5 lakh upfront is a difficult proposition.
Where do HNIs in India prefer to invest these days?
Read More
