SEBI & RIA Over Regulation

I mentioned this before, the MFD industry will survive, but not the RIA industry. Incentives are one thing, but regulation are another. Ever wondered why?

Shutting Down Treasure Trove -

Stalwart Advisors has been running an independent equity research service called ‘Treasure Trove’ for over a decade now. Following are some stats covering this decadal journey: In other words, if someone started with Rs 10 lacs in 2014, did not add any more funds but could execute on research timely, he/she is a crorepati today.

- The Value InvestorsAyush Agrawal

In this case, the regulation was strangling RIAs/RAs. It is difficult to conduct business when…

"But when SEBI gets into deciding what fees RAs/RIAs must charge, curtails their billing to 3 months, insists on KYCing clients etc, it is getting into commercial decisions, a clear case of over-reach."

Aarati got it right…

When the regulator SEBI, starts to view everyone as a criminal, i.e. negative premise, you penalise those who are trying to make it work. Elsewhere, the system is different.

The regulation is light, and if you do some shady shit — be prepared for severe consequences.

When an influencer can conduct a seminar without any worry, but an RIA/RA has to inform SEBI and pay ₹3,000 fees (so I hear) then you really should not be surprised why its failing.

I was talking with a PMS.

He advised me earlier on...

In India, advisory will not work.

Because your collection of money is after provision of service, and in India – best of luck collecting your fees!

If you are to be in a business, you have to get the money upfront. That is the only model that will work.

With PMS, the ₹50L is collected, fees is deducted and then only is the rest given back.

Similarly for MFD, AMCs charge their TER, from which the MFD gets his fee. It is automatically deducted and returns are net of fees.