Why are you shifting your business to fee only model?
Being advisors, we wanted a conflict-free, client-centric model of engagement with our clients. Fee-only model fits well here. We have shifted into this model as this seemed to be the right thing to do from the client's perspective.
How are you ensuring a smooth transition from regular plans to direct plans?
We offer a migration schedule for the existing portfolio, taking into account exit loads and taxes. Our implementation partners have a month-wise implementation schedule which they carryout for clients. We use MFU for investing in direct plans.
What were the challenges in shifting your clients’ portfolios from regular plans to direct plans? How did you overcome them?
First is the mindset change. We informed clients that we are moving from regular to direct plans and would no longer be offering regular plans. We educate them on the services offered and their benefits. We ran an email campaign and also talked to clients individually. We did not have a problem in convincing them to shift to direct plans. We also informed them that if they did not want to migrate to direct plans, they would have to other IFAs who would offer them regular plans.
What were the key concerns of your clients in shifting from regular plans to direct plans?
Clients were used to investing on one platform. They were worried about redeeming the full portfolio and reinvesting, it felt daunting to them. Also, there would be a change of platform and reporting mechanisms which all added to their concerns.
How do you ensure that your revenue model remains intact and clients pay you advisory fees periodically?
We offer a range of services to our clients - financial plan, portfolio & plan review, financial consultations, will making services and so on. Hence, there is a tremendous value, which the client will be able to notice in our offerings. We are billing our clients quarterly and collecting our advisory fees. We have not had any problems in getting fees from our clients due to the value proposition we offer.
Can you take us through your fee model?
We offer a onetime fee initially for the financial plan and an asset under advice model for ongoing engagements, which is optional. If the client wants to only come to get his finances sorted onetime and wants to carry out the recommendations himself, that option is available.
As an advisor, what are the benefits of fee-only model?
RIAs who work on fee based model are SEBI registered advisors and have to meet certain qualification, certification & experience requirements. Apart from that, they need to submit to a higher level of compliance, standards & processes. They will need to go through an audit for process & compliance every year and be prepared for inspection from SEBI's side. The client can be 100% sure that the advisor is acting only in their best interests. Being a fiduciary and acting in the client's best interests is a major advantage for them.
Also, they save money when we recommend direct plans in MFs. We also offer direct versions in various products (like PMS, AIF, perpetual bonds, tax-free bonds etc.) which are commission free, by which the client saves money.
