In this article, Dhilip Krishna discusses why he became a fixed-fee-only SEBI-registered investment Advisor. He is a member of Fee-only India*. Dhilip can be
contacted via his website: Apta Investment Advisors.
* Fee-only India is an informal association of SEBI RIA that charges a fixed fee or a flat fee (independent of AUM).
Recently, BSE released data based on periodic reporting by SEBI-registered RIAs, providing a true picture of the RIA profession in India. Larger picture, for a country of our size and diversity, there are only 660 RIAs in the country (286 individual and 374 non-individual), and of these, only 480 are active (206 active individual RIAs). And only 86 fixed-fee advisors (which I believe is the only right way for investment advisory).
While SEBI has to introspect and think about whether this is the desired outcome, I would like to focus on my experience as a fixed-fee RIA.
Almost all of my professional career has been in investment management, across mutual funds, insurance and broking. So when the Investment Advisory regulations first came into effect in 2013, I was excited and passed the exams required to become an RIA. But family and other constraints meant I didn’t really have the confidence to register.
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Finally, after working in a new-age tech company (which was a great experience in helping me realise what is really important in life), I decided to get registered with SEBI as an Investment Advisor. I got the license in April 2024.
This is purely my privileged experience (having worked for almost 15 years in the investment management industry, and having friends and family who were ready to support me).
1. I entered this profession with very clear expectations. This is not going to give you a crore-type income or anywhere close to it. For most people, it is an economically irrational decision to become an RIA as opposed to an MFD. I became an RIA, and a fixed fee one, because it was the right thing to do
2. Being a financial planner, I had my own savings and investment targets. My expectation for my first year was just to meet my household operational expenses—nothing for capital expenditure and nothing for investments. I was able to achieve that.
3. In my second year, the expectation was to start adding to the annual savings target. With the income from RIA, at least hit 50% of the savings target. I am almost there. So happy on that front. And I guess next year onwards, I will be able to meet my savings targets. Fingers crossed
4. I have not done a single outbound call. All my clients are inbounds. And I am very happy with my new client acquisition run rate. Being a very niche profession (fixed fee ria) means people who reach out know what they want, and know what to expect. So between intro call and conversion, I don’t have too many drop offs. So no time wasted on outbounds, and no time wasted on failed intro calls.
5. I guess pt 4 is because not many people know about RIA (and fixed fee RIA at that), and so those who do reach out are the ones who have done their research
6. Fee Only India has been a great source of support, and in fact, almost 90% of my clients t are from references from FOI. Couldn’t be more grateful for being a part of this group.
Long story short, I understand the outrage with the BSE data. I think this is the first realistic picture on the number of RIAs in India, their nature of business, client profile, and their income. This should be an eye opener to SEBI. After more than a decade of the RIA regulations, this is absolutely abysmal.
Personally, I have nothing to complain about how my journey as an RIA has been. Happy, and as per expectations.
If anyone were to ask me if I should become an RIA, I would say the following
1. Purely on economics, it is an irrational decision to become an RIA. You are much better off as a MFD
2. If you cross step 1, keep your expectations realistic. This is not a crore/year type of profession
3. If you do the right things, there is no retirement age in this profession. You are your own
4. You will make a meaningful difference to people’s lives. There are very few professions that offer this. In this capitalistic world that we live in, to do something like this is a blessing.
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Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 13 years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
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