InvestorQ : Why has IIFL Wealth opted to shut down its advisory business?
Dhwani Mehta made post

Why has IIFL Wealth opted to shut down its advisory business?

Answer
user profile image
Dilmini Mercia answered.
4 weeks ago


Here is what you need to know about the decision of IIFL Wealth to exit its investment advisory business.

· It is not exactly a decision to get out of the advisory business but more a realignment of the businesses by the company in line with new SEBI regulations.

· IIFL Wealth Management will exit its investment advisory business following a SEBI circular asking companies to stop offering advisory and distribution to the same client.

· This demarcation was necessary for IIFL Wealth as it currently has Rs.180,000 crore in assets under advice or AUA which includes customer investment assets.

· As a result, the clients will have the choice to move to the PMS business under IIFL One, which is already a part of the wealth management vertical of IIFL Wealth.

· Currently, IIFL Wealth offers PMS for minimum ticket size of Rs.50 lakhs. Other than PMS, clients will now have to opt to move back to distribution or manage their own investments.

· SEBI ban is at a group level, but for large multi-product entities, it is impossible to know if there are overlaps between distribution and advisory. The easier option for them is to exit advisory altogether.

· IIFL Wealth has confirmed that it has not exited but merely re-organized itself as per the new SEBI regulations. Most banks will also evaluate their HNI advisory businesses now.

Apart from IIFL Wealth, even Motilal Oswal has communicated a similar decision to its clients.