Wealth Forum Advisor Confidence Survey 2017
Part I : Business Confidence
No fikar, no gham - only acche din


The results of the 6th annual Wealth Forum Advisor Confidence Survey are now in. We will cover the highlights of this exhaustive survey in a 3 part article series, with this article covering the Business Confidence Section. You can access the entire report here. The verdict: no fikar about the near term, no gham on turn of regulatory events - only a bright outlook for acche din continuing.

Here are the highlights from the Business Confidence section:

  1. Confidence score for volume growth hits an all time high of 9.1 (out of a max score of 10)

  2. Revenue growth confidence score jumps up significantly from 7.5 in 2016 to 8.9 in 2017, aided by reduction in key threat perceptions involving expense ratio cuts and forced migration to RIA mode. No fikar on margin pressures, for now.

  3. At a score of 4.2, there is no material change over the last two years in the negative impact perceived by IFAs from direct plans (4.3 in 2016 and 4.1 in 2015). No incremental gham on direct plans. IFAs have perhaps adapted to a life with direct plans, though their longer term view, of potential negative impact 3 years from now, continues to be much higher at 5.0 - signifying that the road ahead is going to get more and not less challenging.

  4. India's leading IFAs on average are executing about 15% of their current transactions on open architecture platforms (MF Utility, BSE, NSE and apps that feed into them). They expect this number to jump up very sharply to 60% in 3 years. Open architecture transaction platforms are clearly at an inflection point.

  5. For India's leading IFAs today, for every 2 transactions put through open architecture transaction platforms, 1 is executed by an AMC app or portal (15% vs 8%). 3 years from now, that ratio is expected to widen to almost 4:1 (60% vs 16%). Over the next 3 years, as leading IFAs embrace open architecture platforms, they continue to see a niche for AMC apps and portals - perhaps a niche where the USP will be superior convenience of moving money in and out instantly.

  6. Interest in taking up an RIA licence peaked in 2016 at a score of 4.9 (when the proposed RIA 2.0 regulations were being hotly debated) but has since plateaued in 2017, with the score coming in at 4.6, perhaps as a consequence of SEBI putting it into a backburner for the time being, after receiving inputs from its International Advisory Board. Leading IFAs on average expect a SEBI move to force migration from distribution to RIA 6 years from now (last year: 5 years). No fikar on RIA migration, for now.

  7. In June 2016, 4 months before implementation of enhanced commission disclosures, fear was palpable. A quarter of AuM was seen at risk, a fifth of income was seen as likely to evaporate. 8 months after its introduction, its not shaped up as bad as feared. 13% of AuM is now seen as "at risk" causing a potential 12% drop in revenues. Doesn't mean these disclosures don't pinch - but they are not biting. Not much gham on commission disclosures - at least not anywhere close to the fikar that existed.

The pulse of the leaders of the IFA fraternity is perhaps therefore best summed up as no fikar about the near term, no gham on turn of regulatory events, and a bright outlook of acche din continuing. Inshallah! Amen! Tathastu!

Wealth Forum Advisor Confidence Survey 2017: click here to read the full report

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