AMFI, in its recommendation letter sent to SEBI on the RIA consultation paper, has sought clarification from the market regulator on whether they will have to register under RIA regulations to provide onshore and offshore advisory services.
AMFI has said, A necessary clarification may please be issued that an asset management company (AMC) which is acting as an investment manager to mutual funds, will continue to be exempt from registration under SEBI (Investment Advisers) Regulations, 2013 while drafting the regulations.
SEBI, in its consultation paper, has proposed to make RIA registration mandatory to provide investment advisory services. All the persons engaged in financial planning services shall mandatorily be required to register themselves as investment adviser. Exemption shall be applicable only to the persons carrying out investment advisory activities which are permitted under any other regulations specified by SEBI such as merchant bankers registered with SEBI can render corporate advisory services, etc., and to the persons providing advice only on insurance products regulated by IRDA, pension products regulated by PFRDA, etc., said SEBI.
Typically, an AMC acts as investment manager to mutual funds and undertakes other activities like PMS, advisory service which includes onshore and offshore advisory where fund managers provide investment advisory services to their clients. For many AMCs, offshore advisory services is an integral part of their revenue which contributes significantly to their profits.
“AMCs are product manufacturers and will always be involved in promoting and marketing only their own products to investors/Mutual Fund Distributors/ RIAs. AMCs and their employees cannot be held to be independent or unbiased advisors, as they would always undertake activities towards promotion and sale of their own products, services and solutions, said AMFI.