Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
Sebi is taking multiple steps to strengthen India's investment advisory ecosystem, focusing on compliance, transparency, and guidance. Measures include a standardised light-touch penalty structure, a digital regulatory platform called SEBI SETU, and a common advertisement code for intermediaries. A working group is reviewing overlaps between Mutual Fund Distributors and investment advisers, while NISM is preparing a simplified certification module for non-core advisory staff. Despite a growing investor base, the number of registered investment advisers has declined since 2021, raising concerns about reliance on unregulated voices and influencer-driven guidance.
The Securities and Exchange Board of India (Sebi) is planning several initiatives to strengthen the country's investment advisory ecosystem, its chairman Tuhin Kanta Pandey said at an event organised by the Association of Registered Investment Advisers (ARIA). Advertisement
India currently has roughly 1,000 registered investment advisers, including about 470 individuals and 530 non-individual entities. Pandey noted that the investment advisory sector is at a critical stage of transition, requiring reforms to improve compliance, consistency, and investor trust.
One of Sebi's key measures is a standardised light-touch penalty structure for investment advisers. This framework is being designed to encourage compliance while maintaining transparency and fairness. Pandey explained that such a system would make adherence to regulations more predictable and less burdensome for advisers.
Another significant initiative is the development of SEBI SETU, a digital regulatory guidance platform. The platform will provide end-to-end guidance for investment advisers, covering everything from registration to ongoing compliance obligations. This is expected to simplify regulatory processes and help advisers navigate the rules more efficiently.
In addition, Sebi is preparing a common advertisement code for all intermediaries. The move aims to reduce operational challenges and bring uniformity to communication practices across the sector.
To further refine regulations, a working group has been formed to review the existing framework for Mutual Fund Distributors (MFDs) and identify any overlaps with investment advisers. Separately, the National Institute of Securities Markets (NISM) is developing a simplified certification module for individuals involved in sales and other non-core advisory functions, enabling them to stay compliant while focusing on their roles.
Pandey expressed concern over the declining number of registered investment advisers, noting that this has decreased since 2021 despite a rapidly growing investor base. He highlighted the risk that unregulated voices, such as social media influencers, could fill this gap by presenting opinion as expertise and speculation as strategy. Sebi's Investor Survey shows that nearly 62 per cent of potential investors are influenced by such sources, which can distort behaviour, weaken discipline, and erode trust.
He also emphasized that the challenge is not just regulatory but cultural. Many investors are still accustomed to seeking free advice, and the practice of paying for professional financial guidance is still evolving in India. The key objective, according to Pandey, is to make the registered advisory model viable, scalable, and attractive for qualified professionals.
Pandey also noted that artificial intelligence may influence advisory functions that are repetitive and template-driven. However, he clarified that quality financial advice goes beyond data processing and depends heavily on professional judgment, contextual understanding, and trust-based relationships.
Source PTI
FAQ
Q1: What initiatives is SEBI planning to strengthen the investment advisory ecosystem?
A1: SEBI is introducing multiple measures aimed at improving compliance, transparency, and investor trust. These include a light-touch penalty framework, a digital regulatory guidance platform called SEBI SETU, and a common advertisement code for intermediaries to standardize communication and reduce operational challenges.
Q2: What is the purpose of the light-touch penalty structure?
A2: The standardised penalty framework is designed to encourage compliance while ensuring fairness and transparency. It aims to make regulatory adherence more predictable and less burdensome for investment advisers, promoting a culture of disciplined professional behaviour.
Q3: What is SEBI SETU and how will it help advisers?
A3: SEBI SETU is a digital platform that will provide end-to-end regulatory guidance, covering registration, ongoing compliance obligations, and best practices. It is intended to simplify processes and help advisers navigate rules efficiently, reducing operational friction and improving sector professionalism.
Q4: What is the common advertisement code about?
A4: SEBI is preparing a uniform advertising code for all intermediaries, including investment advisers and mutual fund distributors. This aims to bring consistency to communications, reduce operational challenges, and ensure regulatory compliance across the sector.
Q5: What measures are being taken for training and certification?
A5: The National Institute of Securities Markets (NISM) is developing a simplified certification module for non-core advisory staff, such as sales personnel, allowing them to remain compliant while performing their functions effectively. Additionally, a SEBI working group is reviewing overlaps between Mutual Fund Distributors (MFDs) and investment advisers to refine the regulatory framework.
Q6: Why is SEBI concerned about the declining number of registered advisers?
A6: Despite a growing investor base, the number of registered advisers has declined since 2021. SEBI is concerned that this gap may lead investors to rely on unregulated voices, including social media influencers, who can present opinions as expertise, potentially distorting investor behaviour and eroding trust.
Q7: How does SEBI view the role of technology like AI in advisory services?
A7: SEBI recognizes that AI can handle repetitive, template-based tasks in advisory functions. However, it emphasizes that quality financial advice relies on professional judgment, contextual understanding, and trust, which cannot be fully automated.
Q8: What is the broader goal of these initiatives?
A8: SEBI aims to make the registered advisory model viable, scalable, and attractive, fostering professionalism and ensuring that investors receive reliable and compliant financial guidance, while gradually shifting cultural norms towards paid, expert advice.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
