Explainer: Why Sebi-approved financial advisers are a rare breed

Despite a surge in retail investors to 127 million, India has fewer than 1,000 Sebi-registered advisers, highlighting gaps in access to reliable financial advice.

Strict compliance norms and fee caps have reduced registered investment advisers, pushing investors towards finfluencers and raising concerns over advisory quality.

Even as the retail investor base surges, the number of registered investment advisers (RIA) is less than 1,000. Strict compliance norms dissuade potential advisers, leaving retail investors increasingly at the mercy of finfluencers, writes Anjana Therese Antony

What the numbers say

Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey recently expressed concern over the declining number of registered investment advisers (RIAs) despite a rapid increase in the investor base. The number of unique registered investors in India have quadrupled between 2020 and early 2026 to 127 million, driven by digital onboarding, rise in younger demographics, and increased investments in financial assets by Indian households.

Unbiased and trustworthy financial advice is essential for them. However, there are only 986 registered investment advisers (RIAs) as of April 6, 2026, a fall from the peak of around 1,500 in 2020. This means that there is only one adviser for around every 130,000 investors in the country, leading to increased reliance on unregistered financial influencers.

Three years ago, one in three investment advisers was not registered with Sebi. The regulator had in the past said that India needs 1 million RIAs to bridge the gap in financial advisory services. Currently, more than half of registered advisers are concentrated in the five major metro cities, leaving the rest of the investor base underserved.

Reasons for the decline

Some of the key issues are a higher compliance burden, complex registration processes, a fee cap that restricts higher operational costs, and frequent regulatory shifts. High cost and stringent compliance norms, such as prior permission for advertisements, have led many advisers to consider exiting the registered pool.

Sebi mandates RIAs to obtain prior approval from BSE Administration and Supervision (BASL) for any advertisement or publication, including digital communication. There is a lack of clarity on what constitutes an ‘advertisement’, causing operational difficulties.

Meanwhile, mutual fund (MF) distributors with comparatively minimal compliance requirements can distribute multiple products on the strength of National Institute of Securities Markets (NISM) certifications alone. Products that fall outside Sebi’s direct ambit also become onerous to handle, making the RIA’s position difficult.

Registered advisers vs finfluencers

RIA regulations mandate a strong client segregation rule, forcing registered advisers to choose between charging fees or earning commissions. Many RIAs find the fee-only model difficult to scale due to a cultural preference among Indian investors for “free” advice.

RIA services often involve high professional fee and strict fiduciary duty while finfluencer content is free, easily accessible, and simpler to understand. The result: A gap in the market, which financial influencers, or finfluencers, are taking advantage of.

Though Sebi has been bringing in stringent measures to draw the line between financial education and investment advice by unregulated individuals, retail investors are increasingly relying on finfluencers.

Many investors also follow such content due to the ‘personal investment journey’ such influencers post, though the credibility of the same is unknown. The rising risk of ‘over-reliance’ on such content has raised the risk of fraudulent and misleading activities, making Sebi step up its approach towards finfluencers.

Recent relaxation of RIA regulations

In the last couple of years, Sebi has focused on ease of doing business for RIAs, such as relaxing educational qualifications and removing strict capital adequacy requirements. A graduate from any discipline is eligible to register as investment advisor or research analyst, compared to the earlier requirement of a post-graduation degree.

Base certifications no longer need to be re-taken every few years. A new certification covering only incremental changes in laws and markets is needed. New applicants now do not need to have prior work experience in the financial sector.

Investment advisors can provide a second opinion on pre-distributed assets and charge a fee based on assets under advice within a specified limit of 2.5% of the asset value per annum.

How it works in other big markets

In the US, the number of advisers registered with the Securities and Exchange Commission in 2024 was 15,870. The number of clients served by those advisers stood at 684 million.

In China, the second-biggest market, the number of investment advisers is even higher. China has two categories of financial advisers — public fund managers regulated by the China Securities Regulatory Commission (CSRC) and private fund managers registered with the Asset Management Association of China (AMAC). The number of private fund managers fell from 20,025 in January 2025 to 19,367 in October 2025 due to stricter enforcement norms. Though the number of public fund managers in China are too low at around 160, reports show they manage assets worth $5.6 trillion.

This article was first uploaded on April seven, twenty twenty-six, at fifty-four minutes past eight in the night.