Zerodha CEO Nithin Kamath On India’s ‘Advisory Ecosystem Crisis’: RIA Numbers Lag Behind Investor Growth

Zerodha Founder and CEO Nithin Kamath on Wednesday (August 8) took to the social media platform X, formerly Twitter and wrote, "One of the biggest challenges for the Indian markets is the lack of an advisory ecosystem. While the number of unique investors has grown from about 3 crore in 2020 to 10 crore today, the number of RIAs has barely grown. If anything, the number of RIAs seems to be decreasing."

Currently, there are approximately 900 registered investment advisors in India.

Kamath in his post noted that not all of these provide comprehensive advisory services, which means that the actual number of advisors offering holistic advice is even lower. This stands in stark contrast to the insurance sector, which boasts over 27 lakh agents, and the mutual fund sector with its 2.7 lakh distributors.

" We just have about 900 odd RIAs, and not all of them do holistic advisory, and if you only consider these, the number drops to less than half. That's a few hundred RIAs for 10 crore investors" he added in his X post.

Futhermore, he wrote, "If you consider mutual fund distributors, there are about 2.7 lakh+ plus, but still not enough. For a broad comparison, there are over 27 lakh+ insurance agents. As our markets continue to grow, the number of advisors has to grow exponentially to help new investors.

SEBI’s New Proposal

Recognising this critical issue, the market regulator Securities and Exchange Board of India (SEBI) has proposed new changes to the process of becoming a registered investment advisor.

On August 6, SEBI released a consultation paper suggesting more relaxed norms for becoming an RIA, with an aim to simplify the process and encourage more individuals to enter the advisory field, ultimately increasing the number of qualified advisors available to Indian investors.

"In a new consultation paper, SEBI has proposed many changes that will make it much easier for people to become RIAs. If these proposed changes become final, it'll go a long way toward increasing the number of individuals wanting to become advisors," added Kamath in his post.

Netizens Reaction

Reacting to Kamath post, an X user responded, "Many aspire to register as RIAs/IAs to provide regulated services, but the absurd requirements - like five years of experience or a net worth certificate - make it hardly worth the effort. One certification exam should be enough."

Another user added, "The problem lies in the incentive to be a RIA. SEBI caps the fees that can be charged which disincentivises most to choose it as a career. How SEBI has found out a way to open the doors wider, it also needs to find reasons for people to come in."