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Registered Investment Adviser - The Way Forward | Shyam Sekhar | ithought Advisory - YouTube
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Friends in today's podcast I'm going to聽
talk about the topic ria the way forward聽聽
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the registered investment advisor is a聽
new category of semi-registered entities聽聽
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it's been here for the last five six years and聽
it's fast becoming a very powerful way for advice聽聽
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to be delivered it has just undergone its next聽
transformation this transformation is clearly聽聽
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investor centric it makes the alignment between聽
the investor and the advisor much better聽聽
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obviously this will also聽
lead to a lot of changes in聽聽
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how advisors construct their work how they聽
deliver advice and how they are compensated聽聽
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let me first throw some light on聽
what I think is the way forward聽聽
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firstly this change in the array regulation will聽
lead to more specialization when we saw the first聽聽
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RIA regulation it was principally constructed聽
keeping the mutual fund advisor in mind
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direct option was also brought in聽
so it gave opportunities for both聽聽
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clients and advisors to explore a new way聽
of interacting engaging and doing business聽聽
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with the present changes in the聽
regulation some signals are very clear聽聽
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on the one side the mutual fund industry has聽
not really reduced its total expense ratios聽聽
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in the smaller sized fund schemes regulations聽
allow them to price their smaller schemes better聽聽
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so as an advisor if i am to choose niche聽
products then that cost tends to get added聽聽
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to the investor even if it is under the聽
direct option so the advisor and the investor聽聽
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are not helped by how pricing in direct option in聽
the niche products is functioning which means the聽聽
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advisor only has to go towards the larger products聽
which are very big assets basis and even if the聽聽
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advisor gives his very best these products may聽
actually not meet the expectations of the investor聽聽
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therefore the owners now shifts to the聽
advisor to raise his level of specialization聽聽
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it is only then that investors will appreciate聽
the role of the advisor is relevance to the聽聽
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investors wealth creation journey and聽
the ability of the advisor to translate聽聽
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his investment thinking research and process聽
into tangible results for the advisor聽聽
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so the time has come for more specialization聽
which means the advisor now has to clearly聽聽
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move beyond just the mutual fund space聽
the regulation is still heavily weighed in聽聽
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by what happens in the mutual fund space but聽
an innovative advisor has to move beyond what聽聽
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is happening in the mutual fund space it is time聽
for much more specialization but that still does聽聽
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not reduce the relevance of products as advisors聽
nuance their surveys improve the knowledge base聽聽
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try to create a far more effective advisory聽
solution which could even be a product it is聽聽
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inevitable that the threshold for ria will聽
go up advisors will not have the viability聽聽
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to work with smaller clients which means the聽
smaller client will have to either do it himself聽聽
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or go to the distribution business and find聽
good advice there it would not be possible for聽聽
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an ria to work with smaller clients that聽
is my really because there are different聽聽
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rules that have come into this聽
regulation which will effectively聽聽
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not make it viable for the advisor and if it聽
is not viable i think one should simply make a聽聽
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clean break and not do it because what you do聽
should be viable for you and you should be able聽聽
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to give a good solution for the client otherwise聽
both are going to be unhappy so which means that聽聽
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the threshold is going to definitely rise so only聽
larger clients will work with advisors and the聽聽
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smarter advisors will work only with the larger聽
clients in conclusion the relationship between聽聽
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an ra and his client is going to be far more聽
evolved it's going to be far more long lasting聽聽
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they need to journey together from where they聽
begin to the place where the investment goals聽聽
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aspirations and financial freedom sought聽
by the investor are all achieved one by one聽聽
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it is going to be a test of how this聽
relationship grows symbiotically聽聽
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and provides more than ample benefits to聽
the investor who places faith in the ra聽聽
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if one is going to productize his business聽
then it is going to be one where the products聽聽
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meet the investment goals of the聽
client and provide what they promise聽聽
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essentially we are heading towards a phase where聽
the ra ecosystem will get progressively better聽聽
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become more oriented towards risk and聽
process management fill gaps which the聽聽
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mutual fund ecosystem refuses聽
to fill at this point in time聽聽
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move away from a selling oriented approach聽
towards a buying oriented approach and聽聽
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be a system that stands out for trust and聽
confidence thank you for watching this podcast
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