Here is some happy news for mutual fund advisors. Indian investors are getting more comfortable paying a fee for the financial advice. According to some financial advisors, the change in investor behaviour is quite evident these days. They also say investors have started realising that free advice is not really free, and it is often subsidised by commissions from elsewhere.
“Retail investors are getting comfortable paying a consultation fee,” says Prashant Mudgil, certified financial planner, Intellectual Financial Planning and Advisory. Mudgil is ramping up his website with a payment gateway after the number of his fee-based clients has started going up recently. “Investors are getting more aware about how financial advisors and planners work, their remuneration and commission source from the mutual fund house. They are now seeking for a true unbiased investment advice.”
Mutual fund advisors in the country have been quite despondent lately. A series of changes made by Securities and Exchange Board of India (Sebi) are threatening the existence of them, they complained. The market regulator has been pushing towards a fee-based advisory model which advisors thought would not work in India because of investors reluctance to write a separate cheque for the advice. It seems, investors are no more reluctant to write that extra cheque.
Rakesh Chaudhary, Certified Financial Planner, Khushi Finance, says a new client asked him directly about his investment advice fee. What is striking about the episode is that the client was just a regular investor earning around Rs 5 lakh per year. Incidentally, Chaudhary would charge 1 per cent of the portfolio as fee.
“Clients don’t mind paying you a fee as long as you are delivering them some value,” says Pramod Bajaj, an IFA based in Delhi. Most of his clients are working couples earning around Rs 20 lakh and he charges around Rs 5,000- 15,000, depending on their profile. Bajaj is in the process of registering as an RIA with SEBI.
Those who are ready to pay the fee also expects a certain amount of professionalism from advisors. Typically, they expect a detailed portfolio review after every six months and an update on the performance of their mutual fund schemes on a monthly or quarterly basis.
“Retail investors are getting comfortable paying a consultation fee,” says Prashant Mudgil, certified financial planner, Intellectual Financial Planning and Advisory. Mudgil is ramping up his website with a payment gateway after the number of his fee-based clients has started going up recently. “Investors are getting more aware about how financial advisors and planners work, their remuneration and commission source from the mutual fund house. They are now seeking for a true unbiased investment advice.”
Mutual fund advisors in the country have been quite despondent lately. A series of changes made by Securities and Exchange Board of India (Sebi) are threatening the existence of them, they complained. The market regulator has been pushing towards a fee-based advisory model which advisors thought would not work in India because of investors reluctance to write a separate cheque for the advice. It seems, investors are no more reluctant to write that extra cheque.
Rakesh Chaudhary, Certified Financial Planner, Khushi Finance, says a new client asked him directly about his investment advice fee. What is striking about the episode is that the client was just a regular investor earning around Rs 5 lakh per year. Incidentally, Chaudhary would charge 1 per cent of the portfolio as fee.
“Clients don’t mind paying you a fee as long as you are delivering them some value,” says Pramod Bajaj, an IFA based in Delhi. Most of his clients are working couples earning around Rs 20 lakh and he charges around Rs 5,000- 15,000, depending on their profile. Bajaj is in the process of registering as an RIA with SEBI.
Those who are ready to pay the fee also expects a certain amount of professionalism from advisors. Typically, they expect a detailed portfolio review after every six months and an update on the performance of their mutual fund schemes on a monthly or quarterly basis.
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