Narendra Modi's Washington test

Narendra Modi's Washington test

If Modi gets the world’s biggest power right, his pursuit of larger global goals...
Small banks or banks for ‘small’ people?

Small banks or banks for ‘small’ people?

Unless appropriate sub-limits are imposed on loans, there is a serious...

Investment advisory: Piece of advice, peace of mind

Feb 10 2014, 14:17 IST
Comments 0
Sebi's regulation allows MF distributors, CAs etc to provide investment advice to their clients incidental to their primary activity. Sebi's regulation allows MF distributors, CAs etc to provide investment advice to their clients incidental to their primary activity.
SummaryA look at how Sebi is working to free investment advisory space as it tries to win over investors.

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.

Steps taken

* 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 down guidelines on who qualifies as an advisor and also drew broad contours of the rules and regulations within which they need to operate

* Sebi also invited applications for setting up Self Regulatory Organisation (SRO) for mutual fund distributors. While three organisations — Association of Mutual Funds of India, Financial Planning Standards Board, India and Financial Intermediaries Association of India — have applied, Sebi is yet to take a decision on appointing one of them

Single Page Format
Ads by Google

More from Personal Finance

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...