- Date : 21/03/2023
- Read: 2 mins
SEBI updated the Investment Adviser Regulations (2013), updating and making it capable for advisers in 2020.
SEBI updated the Investment Adviser Regulations (2013), updating and making it capable for advisers in 2020. While the idea was right, it led to increased compliance and fewer investment advisers joining the profession. Investment options are limited when the wealth is limited, and one might not require much financial planning. However, with more earnings comes the need for sophisticated financial planning. Indians are rapidly earning more and becoming wealthy. In turn, it requires many more good investment advisors.
The Need For Registered Investment Advisors (RIAs)
An RIA works for the client's best interest in a fiduciary capacity. An RIA is more qualified in certification, experience, and education than a plain vanilla distributor. It is why RIA charges a fee instead of commissions. It helps them stay conflict free. Interestingly, there are only 900 RIAs after 10 years. There is a belief that people are not paying for financial advice, and the profession is not viable.
Also Read: This is how you choose a financial advisor.
Criterion
After the change in 2020, the criterion for eligibility as an RIA became more stringent. The bar is high and requires a post-grad in economics, finance, etc., a diploma from the National Institute of Securities Market, a minimum of five years' experience in a related field, and so on.
Conclusion
An RIA must become a corporate entity if they have over 150 clients. A new RIA would charge modestly and try to serve the maximum number of clients to make his practice viable. However, it leads to over 150 clients quickly. It also leads to incorporation, which is costly. The fee for registration with SEBI is Rs. 5 lacs and an additional Rs—25,000 for application.
SEBI updated the Investment Adviser Regulations (2013), updating and making it capable for advisers in 2020. While the idea was right, it led to increased compliance and fewer investment advisers joining the profession. Investment options are limited when the wealth is limited, and one might not require much financial planning. However, with more earnings comes the need for sophisticated financial planning. Indians are rapidly earning more and becoming wealthy. In turn, it requires many more good investment advisors.
The Need For Registered Investment Advisors (RIAs)
An RIA works for the client's best interest in a fiduciary capacity. An RIA is more qualified in certification, experience, and education than a plain vanilla distributor. It is why RIA charges a fee instead of commissions. It helps them stay conflict free. Interestingly, there are only 900 RIAs after 10 years. There is a belief that people are not paying for financial advice, and the profession is not viable.
Also Read: This is how you choose a financial advisor.
Criterion
After the change in 2020, the criterion for eligibility as an RIA became more stringent. The bar is high and requires a post-grad in economics, finance, etc., a diploma from the National Institute of Securities Market, a minimum of five years' experience in a related field, and so on.
Conclusion
An RIA must become a corporate entity if they have over 150 clients. A new RIA would charge modestly and try to serve the maximum number of clients to make his practice viable. However, it leads to over 150 clients quickly. It also leads to incorporation, which is costly. The fee for registration with SEBI is Rs. 5 lacs and an additional Rs—25,000 for application.
