A reader who prefers anonymity asks, “I would like to become a SEBI registered fee-only advisor. However many people in financial services have discouraged me. They either ask me to do something else or become a commission-based advisor or charge a fee based on the AUM of the client. I find these models unappealing. I am worried if I will succeed as a fee-only advisor. Please advise”.
On further discussion, we found that the person satisfies the necessary qualifications to become an individual SEBI registered fee-only advisor – NISM level 2 certification, a relevant PG degree with five years of experience working with an online intermediary and a net worth of Rs. 5 lakhs.
So there is no technical issue in becoming a SEBI registered investment advisor. However, there are many practical issues.
- Becoming an SBI RIA is a full-time job. So do not get into it unless you have at least 5 years of expenses ready for use.
- Many SEBI RIAs are struggling to get clients on a regular basis (regardless of their fee model). Of course, there are many successful ones but they are more exceptions rather than examples. This is true of even commission-based agents.
- SEBI is an annoying regulator. There are too many compliances to worry about and potential changes in regulations in future.
- Unless you are absolutely sure that one-to-one client advisory is your calling and nothing else will make you happy, do not go down this path. Even if you do, have a backup plan ready if things do not work out!
- If you are sure about this and if you do not mind the struggle in the initial years to get clients, then this is what you will need. A practical approach is to follow these steps (without offering advisory services) and create content regularly to appreciate what readers expect and build a community around you.
- Once your readers or viewers send you requests about getting your advice for a fee, you know that you are ready and can get registered with SEBI with much more confidence.
- A friendly website that tells the viewer the scope of your services clearly is crucial. Here are some excellent examples:
- What is much, much harder, and what most advisors do not have, is a client attraction strategy. How will you make people realise that there is an advisor like you on the planet? If you can crack this, you can become a successful advisor – whether the revenue comes in via commissions or is AUM based or is a flat fee.
- Once the clients start coming and if you are good and only if you are good, they will send other clients your way by referrals.
- You can consult any of the RIAs on our list of SEBI registered fee-only advisors.
So the goal should be to build a diversified client acquisition strategy via
- Articles on your website
- Videos on your website or on YouTube or on social media
- Posts or Tweets on social media
- Quotes in newspapers (for which a good Twitter presence makes a difference)
- Community outreach etc.
- guest posting on popular websites or newspapers.
- Your friends and colleague circles.
But will you say in these articles or videos or tweets? There are so many examples of what not to say!
- importance of financial planning
- importance of an advisor
- I will help you sort your finances
- oh look how smart I am!
These are things that would drive away most clients! A potential client is looking for two things: (1) Is this person competent? Where can I see evidence of this? (2) Is this person approachable and friendly? The second question will be answered in part by your online behaviour and in part by the initial discussion or con-call.
A client decides competence if she finds answers to her questions in your content. So it is imperative that the advisor writes from the point of view of a client. Many advisors fail to do this.
We have a course which can help wannabe advisors build a client attraction strategy by systematically showcasing their competence: Increase your income by getting people to pay for your skills!
In summary, we recommend those aspiring to become SEBI registered advisors to first spend time understanding what clients want and creating content that caters to their needs. Build a community of loyal readers or followers first (while continuing with your present job) and then get registered with SEBI and start advisory services to immediately work on an interested client base (and potential referrals thereon).
Inspiring fee-only advisor stories (exceptions maybe but inspiring nonetheless)
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About The Author
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 nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or 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 for promoting unbiased, commission-free investment advice.
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