A registered Investment Advisor is a person or an institution that gives investment advice to people. Investment Advisors are registered with India's market regulator, the Securities and Exchange Board of India (SEBI). Their responsibility towards their customer is more than mutual fund managers. Investment Advisors provide a monetary plan to their investors, after studying their purposes, finances, and their current monetary situation. They charge some amount as a fee for doing so. It is mandatory for a group of people or firms willing to provide investment advice to anyone to register as an investment advisor under SEBI as only those registered with SEBI can give financial advice to clients for various financial products.
Investment Advisors play various roles such as financial planner, portfolio manager, and also tax savings advisor. A person, a partnership firm, or a corporate are eligible to get registered as Investment Advisor in India. Such Investment Advisors can help clients in financial planning which will eventually help in gaining monetary benefits. Also, some investments help in reducing the tax liability and a person can claim these while filing income tax returns. SEBI Investment Advisors Regulation, 2013 regulates and guides investment advisors in India. It also prescribes the registration terms, qualification, eligibility criteria, fees to charge from the client, agreement with the client, and implementation services. An agreement with the client helps in maintaining the integrity of the service. Any format of the agreement is not prescribed by SEBI currently, though, the guidelines and conditions are specified.
SEBI recently issued a circular to all the investment advisors describing the framework for administration and supervision of Investment Advisers under the SEBI (Investment Advisers) Regulations 2013. The key points of the circular are discussed below.
1. Investment Adviser Administration and Supervisory Body(IAASB): A body or corporate to regulate Investment Advisers and supervise the Investment Advisor is to be formed. Subsequently, such body shall be designated as Investment Adviser Administration and Supervisory Body(IAASB) and shall be trusted with the management and supervision. For this purpose, BSE Administration and Supervision Limited, a substitute for BSE Limited, has been given acknowledgment as IAASB for three years.
2. Responsibilities of IAASB: Responsibilities of IAASB are as follows
3. Director of IAASB: The IAASB will be chaired by a Public Interest Director who will bring investor outlook. SEBI will regularly administer and supervise all registered Investment Advisers and IAASB will also be subjected to periodic inspection by SEBI.
4. Membership of IAASB: To ensure compliance with the regulation and guidelines all existing Investment Advisers are required to seek membership of IAASB within three months of the recognition of IAASB by SEBI.
5. Payment of fees: The existing Investment Advisers will be required to pay fees to IAASB in a way prescribed by IAASB to keep their registration working. Any other payment will be in the manner prescribed by IAASB.
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