📌 A Shocking Reality I Recently Came Across
Recently, I read an insightful article in Business Standard published on June 24, 2025, which revealed that in the first five months of 2025, the SIP (Systematic Investment Plan) closure rate in Direct Plans was 2.6 times higher than in Regular Plans
As someone who guides clients on wealth creation through mutual funds, this statistic immediately got my attention.
Why are investors in Direct Plans—considered ‘smarter’ and ‘cheaper’—stopping their SIPs faster than those working with advisors?
The answer lies in one key area: human behavior.
And that’s where a Mutual Fund Advisor delivers value beyond the numbers.
📌 Direct Plans: Lower Cost, Higher Emotional Risk
Yes, Direct Plans are cost-effective, saving you roughly 0.50% to 0.70% in annual fees. You can access them easily online via apps or websites.
On paper, it seems ideal—but investing isn’t only about costs or past returns.
It’s about managing emotions, discipline, and timing—none of which an app controls.
When markets dip:
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Investors panic
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**SIP contributions halt **
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Holdings get redeemed or shifted to 'safer' options
Your app doesn’t:
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Call you and say “Stay the course.”
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Remind you of your long-term goals
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Rebalance your portfolio
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Steer you away from impulsive decisions
📌 Emotional Discipline: The Real Key to SIP Success
A successful investing journey isn’t about chasing the best return each year.
It’s about staying committed for 10, 20, or 30 years, through varying market cycles.
Emotional discipline ensures you don’t abandon your SIP during volatility.
For example:
👉 In March 2020, when the Nifty 50 plunged ~38%
👉 DIY investors panicked, stopped their SIPs, and exited at losses
👉 Investors with advisors stayed put—some even increased contributions
Those disciplined investors recovered swiftly and benefitted from the rebound in 2021–22.
The difference wasn’t the fund—it was the investor behavior, guided by advisors.
📌 Direct Plans Are Tools, Not Strategies
An app lets you:
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Start a SIP
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Monitor returns
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Redeem or switch funds
But it doesn’t:
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Understand your goals
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Gauge your risk appetite
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Balance your portfolio
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Provide guidance during crises
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Adjust your strategy as your life evolves
Investing without strategy is like driving without a steering wheel—you might move forward, but you’re steering blind.
📌 Importance of Proper Asset Allocation
A common Direct Plan mistake is chasing past returns—loading up equity in bull runs, and fleeing to debt in bearish phases.
Without proper allocation, your portfolio becomes unstable—either overly risky or too conservative.
A qualified advisor:
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Assesses your risk profile
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Aligns your investments with your life goals
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Diversifies across Equity, Debt, Hybrid, Gold, and Liquid Funds
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Reviews and rebalances your portfolio regularly
This ensures consistent growth without excessive risk as life and markets evolve.
📌 The True Cost of Avoiding an Advisor
Indeed, Regular Plans include a 0.50%–0.70% advisory fee. But the cost of DIY mistakes can be far greater:
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Wrong fund choices may underperform for years
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Stopping SIPs during downturns can diminish future wealth by 20–30%
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Poor diversification leads to bigger losses
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No reviews mean outdated investments misaligned with goals
Advisors do more than recommend—they protect your financial journey.
📌 Case in Point: Two Investors, Two Outcomes
Meet Ramesh and Suresh:
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Ramesh started a Direct Plan SIP in Jan 2020.
When COVID hit in March, he panicked, withdrew in April and again invest after the market rebound, he missed the rebound. -
Suresh, guided by his advisor, stayed invested and even increased his SIP.
He stay invested and focused on his goal not on timing the market. He only listen to his advisor only.
Same funds. Same period. Different outcomes—thanks to emotional discipline under advisory guidance.
📌 Final Thought
Investing is easy. Staying invested and disciplined is hard.
Yes, an app shows historical performance—but an advisor ensures you actually achieve those returns through:
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Managing investor behavior
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Adopting proper asset allocation
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Staying committed through volatility
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Avoiding emotional blunders
A modest 0.50%–0.70% advisory fee is a small price to pay for disciplined wealth building.
📌 If you’re serious about long-term growth, don’t go it alone. Invest with guidance.
At RerassWealth, we don’t just manage funds—we manage emotions, goals, and financial journeys.
📞 +91 7991147238
🌐 www.rerasswealth.in
📧 rerasswealth@gmail.com
💼 Rajesh Roushan
AMFI Registered Mutual Fund Distributor – ARN-327367
Founder, RerassWealth
📖 Reference:
[“SIP closures in Direct Plans 2.6X higher than Regular”, Business Standard, June 24 2025]business-standard.com+1angelone.in+1angelone.inhindi.business-standard.com+1cafemutual.com+1business-standard.com
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