ARIA releases whitepaper simplifying nominations and successions

Representative image (Source: AP)

The Association of Registered Investment Advisors (ARIA) on September 30 launched a whitepaper titled 'Reimagining Nominations-Making Succession Smoother and Simpler', which details out a 15-point comprehensive policy for easing the process of nominations and successions.

The whitepaper aims to provide convenience to consumers and take the litigation burden off the judiciary. 

The death of a family member is, as it is, an emotionally traumatic affair, which need not further be complicated by harrowing legal and financial procedures to ensure a smooth succession, especially when emerging technology stacks, like the AA (Account Aggregator) and the Aadhar ecosystem can be effectively leveraged to streamline nominations and asset transmission. 

Data suggests that a massive amount of funds lie unclaimed under various accounts and instruments, due to a lack of simplification and integration of scattered information about the deceased’s financial portfolio. Per data from recovery, around Rs 24,000 crore are lying unclaimed in mutual fund units, about Rs 48,000 crore in PPF (Public Provident Fund), and as much as Rs 25,860 crore lying unidentified in various bank accounts. 

Addressing the imminency and pertinence of the issue in the light of the Covid-19 pandemic, KV Kamath, former-president, New Development Bank, said that this issue “jumps straight up the queue” in relation to other issues the world and India are battling in the wake of the pandemic. He also expressed optimism, setting a 90-180 day window for the implementation of this proposal, provided there is adequate regulatory coordination. 

He continued, “#ARIAtrulycares is a commendable initiative by ARIA in these difficult times when it is really crucial to help people who, after losing a loved one, are struggling to seek assistance in financial matters. I am confident that by evolving into an authoritative resource for investors and investment advisors, ARIA is fulfilling a big need that today’s exponentially growing retail investor ecosystem needs.”

The paper, penned by Pramod Rao, Group General Counsel, ICICI Bank, proposed many measures, including easy, simple processes to check the status of nominations,  provisions for e-nominations and minor nominees, specifying any number of nominations, along with categorically detailing the percentage of asset allocation for each, along with single-scrip level nomination, common form, and paperwork, amongst others. He mentioned that a "disarray of your financial legacy would be a disservice to successors". 

He elaborated, “I am delighted to be a part of this important initiative by ARIA which aims to support the investor community at large. This white paper attempts to outline the policy objectives and focuses on nomination facilities agnostic of any financial asset category and proposes measures for enhancing, improving, and upgrading these facilities for the financial consumers and their successors."

"The accompanying spotlight papers focus initially on bank accounts, banks safe deposit lockers, Demat accounts, and mutual funds, and will focus on other asset classes going forward in subsequent series as released by ARIA,” he added.