Before I dwell into the 4th reason, I am absolutely thrilled to share with you all, that I cleared the 2nd level of #nism #investmentadvisory exam (XB) today. As the final screen popped up and showed PASS, I almost yelped in delight.
However, XB turned out to be far more relevant (and even easier) as compared to XA. As weird it might sound, I am glad I failed in the first attempt of XB, which I took last week. As while going through the 480-page workbook (I had only referred to “pass for sure” for the 1st attempt) I got answers to several missing links in the platform I am developing.
I feel these exams are a must for all Wealth RMs (who are in the profession for its’ real purpose) not only since they are mandatory now, but the process of preparing and taking these exams, will make one a better, more holistic advisor.
Now, coming to the core issue that I had left un-addressed in my previous post 3/n *
What (or rather who) is holding them back? As left to themselves, many (if not most) Wealth RMs would want to engage with their clients as a (certified) investment advisor. They would hate to be referred to and function as just distributors – which they are today, given the regulations.
What is clear is that under the new regulations, the distribution-led approach has become antithetical to the core idea behind wealth management. Therefore, should it not have been a no-brainer decision for all firms (big or small), to move towards advisory?
The answer, why that has not happened, lies in the top-down structure of the industry.
Which is indeed a travesty, as this is one profession, where the relationship manager is the central character (besides the client) around whom a firm should operate. Instead, it is the other way around. And as a result, Wealth RMs have to deal with multiple and complex KRAs, focused product drives, over-zealous reviewers et al. I am told some firms even run daily trackers on product numbers.
The major issue for firms, ofcourse, is the distribution income at stake. Hypothetically, if every Wealth RM (in the industry) were to make the transition from a distributor to an investment advisor, the overall revenue pool of the industry runs the risk of falling by about 50%. As, even though investment advisory engagement is any day better than distribution (from the client’s point of view), when it comes to writing a cheque to the advisor, investors end up negotiating.
Be that as it may, the fundamental issue is the top-down structure which sets the tone, which has reduced the Wealth RM to a mere cog in the wheel. And I am afraid, has also taken some sheen off the profession- evident from the massive churn taking place in the industry.
This has to change, sooner than later. And there is a huge opportunity out there, for Wealth RMs – they need to take some risk though **
I can say from my personal experience. Guys – it is worth every penny.
