The recent reforms by India’s capital market regulator, SEBI, suggest a strong resolve to protect the interests of investors and Samasthiti Advisors is proud to be a part of this revolution

The penetration of financial products in India is still quite low. People primarily invest in real estate, gold and fixed deposits and very little in other financial products like mutual funds. Recent studies point to people’s lack of awareness, trust and confidence in products that go beyond these traditional investments.

The reason for the low confidence is rooted deeply in the design and delivery structure of financial products in India. Until recently, financial planning was provided as an ancillary activity to the main activity of selling financial products. This was problematic because,

• Financial planning, if at all undertaken for investors, was never taken seriously despite the underlying need for it.

• Irrespective of the financial goals of an individual and other important aspects like age, income, risk preference, etc, only those products were preferably sold that earned the seller, or the distributor, a high commission.

This has led to gross mis-selling of financial products wherein investors end up investing in products that are high-cost, inefficient and not in sync with their financial goals. Unsuspecting people who invest their hard-earned money on these products eventually realise their mistake. Many get discouraged and vow to never invest again in seemingly complex financial products and prefer to keep their savings in fixed and recurring deposits.

Things are, however, beginning to look up with tightened regulations and reforms that bring greater transparency to our capital markets.

In order to protect the interests of investors, SEBI, since 2013, has been consistently introducing reforms to regulate the activity of investment advisory and financial planning in India.

As part of the new regulations, only SEBI Registered Investment Advisers (RIAs) can provide financial planning services. These RIAs are obligated to follow all the norms and regulations laid down by SEBI. One important requirement for RIAs is that they cannot earn a “commission” from the products they suggest. Thus RIAs cannot earn any commissions from mutual funds, insurance companies, etc. Further, distributor(s) of financial products can no longer call themselves “investment advisers” or “financial planners”.

This helps the investors in clearly differentiating an advisor from a distributor when they approach the capital markets for solutions.

Further steps need to be taken to enforce these regulations but it is clear that SEBI is determined to make investing in capital markets a safer and fruitful experience for investors. There is hope that the increased transparency will result in significant improvement in penetration of financial products in India.

We launched Samasthiti Advisors in 2019 to add to the limited but steadily growing pool of SEBI RIAs in India. Our principles are strongly aligned with that of SEBI’s. We entered this space to democratise financial planning in India and to make it available to everyone, and not just the privileged few.

With a mission to reduce the mis-selling of financial products in India, Samasthiti decided to embark on the difficult but righteous path of charging a “fixed-fee” for our services as opposed to the current dominant model of “fee based on assets under management”. Our fixed-fee model ensures that we are deeply committed to delivering reliable, trustworthy and un-biased services to all our clients irrespective of the income bracket they come from.

A lot needs to be done in terms of building people’s faith in the financial markets and bringing awareness to the power of financial planning. Most Indians have been conditioned to believe that financial planning is only for the affluent. Or that, financial planning will somehow add to your financial burden and lock-in your money that you might otherwise require for immediate needs. All of this is untrue and Samasthiti is constantly trying to educate, inform and empower individuals so they can truly benefit from the financial markets.

Here’s a short video that talks about Samasthiti’s journey, our approach, in a nutshell: