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?

Dilmini Mercia answered.
2 years 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.