’Biggest challenge’: Zerodha’s Nithin Kamath says Indian equity markets lack advisory ecosystem

Zerodha's Founder and Chief Executive Officer (CEO), Nithin Kamath, posted on social media platform X that the Indian equity market faces one of its biggest challenges": the country's lack of an advisory ecosystem. With the number of unique investors growing, the number of Registered Investment Advisors (RIA) seems to be falling, Kamath said.

“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,” said Nithin Kamath, the CEO of Zerodha Fund House.

Kamath highlighted how the number of unique investors has grown to 10 crore, as compared to 3 crore in 2020, while the number of registered investment advisors (RIAs) has barely grown. The CEO said that the number of RIAs seems to be, in contrast, falling.

“We just have about 900 odd RIAs, and not all of them do holistic advisory,” said Kamath in the post on social media platform X. The post also highlighted the numbers dropping to less than half, which makes up for a few hundred investment advisors for a total sum of 10 crore investors in the country.

There are more than 2.7 lakh mutual fund distributors in India, which is still not enough for the number of investors. If we compare the insurance segment, we see that it has more than 27 lakh insurance agents in the country, he said.

“As our markets continue to grow, the number of advisors has to grow exponentially to help new investors,” he said in the post.

SEBI proposes changes to becoming RIAs

On August 6, the Securities and Exchanges Board of India (SEBI) proposed making changes to becoming a registered investment advisor and relaxing the process overall in its new consultation paper. The proposed norms will increase the number of individuals and applicants seeking to become investment advisors.