Why Retail Investors Should Count on SEBI-Registered Investment Advisors
As a patient is advised to visit a doctor for proper diagnosis instead of relying on self-diagnosis and a malfunctioning electrical connection needs an electrician for service, an investor who intends to invest in mutual funds and securities is encouraged to seek the services of a SEBI-registered investment advisor (RIA).
Most young investors are inclined to follow unsubstantiated advice from influencer personalities on social media platforms instead of seeking the guidance of a SEBI-registered investment advisor. However, due to a subsequent crackdown, the position of SEBI-registered advisory firms has become more consolidated.
Who are SEBI-Registered Advisors?
SEBI-registered investment advisors are financial experts who are licensed by the Securities Exchange Board of India (SEBI) to provide investment advice to investors for a fee regarding investments in the securities markets. Regulations defining investment advisory roles are provided in the SEBI Regulations of 2013.
Who can become an RIA?
Any individual or corporate entity willing to provide investment advice to clients can apply to become a SEBI-registered investment advisor. ICSI, ICAI and ICWAI members providing investment advice incidental to their professional services are exempted from registering under IA regulations.
How to Obtain Registration?
Application can be made via form A as provided in First Schedule of 1A Regulations with necessary supporting documentation.
The application for registration as an investment advisor can be filed with Sebi’s head office or regional /local offices under the jurisdiction where the applicant’s registered address is located.
When Does Sebi Approve the Registration?
Once Sebi is pleased that the applicant meets all the requirements, it will approve the application, and upon payment of the registration fee, grant a registration certificate subject to terms and conditions.
After receiving the approval from Sebi, the applicant must pay a registration fee of INR 2,000 (in case of an individual) and INR 10,000 (in case of a corporate applicant).
Advice and Suitability Analysis
Personal finance is highly personalised. Understanding diverse products is necessary to identify the best-suited products for wealth generation and investment. The advice provided by SEBI-registered investment advisors takes into account individual investor suitability to recommend investment options.
Taking advice from influencers is like taking medical advice based on recommendations from Google. Seeking an appropriate medical professional’s advice is necessary, similarly, understanding various investment products and considering a registered investment advisor’s recommendation creates good returns for the investor.
Conclusion
SEBI-registered investment advisors provide diverse services in the securities markets. They provide personalised advice that takes into account an individual taxpayer’s investment suitability for wealth generation. Seeking such advice from registered advisors is necessary for retail investors to make informed investment choices.
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
