India has very few financial planners. But here’s why the trend is changing fast?

You probably know that India does not have too many financial planners. But this trend is changing rapidly across all other cities in India. What’s forcing this change are the following factors:

Growing awareness about fee based financial planning in media

• From blogs to magazines and newspapers people have been reading a lot about financial planning these days. This was not the case until 2 years back.
• So much so that Economic Times has started a dedicated supplement called ET Wealth. News channels have dedicated shows on Financial Planning.

People have become aware about bad/wrong products

• Thanks to the advent of so many information sites, lot of clients know and can differentiate a good product from a bad product. Comparison websites from Value Research to Policy Bazaar are quickly giving this information in matter of minutes.
• Do you think you can continue pitching them the same products and expect them to keep buying?

The days of high commissions are long gone

• It all started in 2009 when the upfront commissions in mutual funds were gone. The trend is likely to continue. If you look at the mature markets like US, Australia etc. the expense ratios of the mutual funds have gradually been declining and the advisors there have been forced to rely on fee based income.
• In India too, we are likely to face such a scenario. Not any time soon. But you can’t afford to wait for that day and then think about an alternative. You’ve got to start the transition process before it is too late.

The technology to do financial planning is now available

SEBI wants you to focus on fees

• There was a lot of hue and cry over the ban of upfront commissions back in 2009. One good thing it has done is that it has wiped out the bad quality advisors and made sure only quality advisors remain. That’s why you’re still reading this!
• In fact, SEBI wants this trend to continue and hence the RIA regulations are another step in this direction. Relying on commissions is going to increasingly get difficult. I’ve been seeing lot of advisors opening up to the RIA idea and have already started applying for the same.