is stopping a lot of individuals from getting registered as advisors,” said Ramesh. While Sebi has brought in some changes to bring CFP’s directly into the investment advisory fold there are many who feel that Sebi needs to do a lot more in order to make it a success.
Sebi’s Investment advisory regulations state that no one can carry out advisory business unless registered with Sebi and also puts in a condition that adviser’s shall maintain an “arms length” relationship with all activities other than advisory. A number of investment advisors see it as a major road block as they are concerned about their distribution income that they have built over several years and which they will have to forego if they start working as an adviser.
While some are getting their family and extended family members to become a distributor so that they can transfer their distribution business the company, there are others who are making their business partners to set up a distribution firm where they can transfer that business.
“I want to work as an adviser but I can’t let go my distribution income that I have built over the last 8-10 years,” said a financial planner based in Mumbai.
Also Sebi’s regulation allows MF distributors, chartered accountants, insurance agents, pension adviser, advocate etc to provide investment advice to their clients incidental to their primary activity and does not provide a specific business model to advisers that distributors can’t do.
Therefore, till the time these bottlenecks remain and more clarity comes out, Sebi may find it tough to attract the financial planners into the advisory fold and thereby usher in a new regime of fee based advisory module that is expected to be more transparent and investor friendly.
* In 2009, Sebi took a decision to ban entry load on mutual funds thereby bringing in an advisory fee regime where the investor would decide on the fee to be paid to the distributor based on the service offered. Later, it thought of clearly defining the roles of distributor and advisor.
* In 2013, Sebi brought in the Investment Advisor Regulations where it laid