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MF News SEBI cautions investors to seek investment advice only from RIAs

SEBI cautions investors to seek investment advice only from RIAs

The market regulator has urged public to look at the list of SEBI RIAs before seeking any investment advice from individuals and entities.
Nishant Patnaik Dec 3, 2018

In its do’s and don’ts note, SEBI has asked investors to deal only with SEBI registered investment advisers to avail investment advisory services. In fact, the market regulator has urged people to look at the list of SEBI RIAs and research analysts on its website before availing investment advisory services.

Further, SEBI has advised investors to pay advisory fees through banking channels such as NEFT, IMPS or cheque and maintain duly signed receipt with details of payments.

Here are SEBI recommended do’s for investors

  • Ask for risk profiling before accepting investing advice
  • Ask relevant questions and clear doubts with RIA
  • Assess risk-return profile of the investment and understand concerns related to liquidity and safety aspects
  • Insist on getting terms and conditions in writing
  • Approach SEBI if RIAs offer assured returns

SEBI recommended don’ts

  • Avoid falling prey to stock tips
  • Do not give money for investment to RIAs
  • Beware of stock tips or guaranteed returns
  • Avoid getting carrying away by luring advertisements
  • Don’t transact on the basis of phone calls or messages
  • Don’t take decisions due to repeated efforts of sales person
  • And finally don’t rush into making investments that do not match with risk appetite

As on May 2018, the total number of SEBI RIAs was 918. Of them, over half of them are individuals.

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18 Comments
Gyanendra Kumar Pahuja · 6 days ago
Nice initiative by Sebi but they must organise training for advisors at least twice a year for all the updates regularly so that nothing gets missed
c s kabra · 3 days ago
Why SEBI allow AMFI regd advisors to distribute Mutual funds and various AMCs to organize high end educative brain storming interactions addressed.by well know experts - why it is allowed and distributors are taken in hoardes by flights if they are not supposed to advice.SEBI must stop AMC to fool the public .Now SEBI keep coming out with circulars that Investors must be cautious- yes they should be but how many of them are prepared to pay fees to Regd Advisors- Do they value their advice and give respect as they do to Doctors or lawyer. SEBI has no long term vision .As per GST every service provider has to charge service tax from every service receipents irrespective of amounts. Now why on MF investor is not paying GST when he is paying it for all other financial instruments and why Distributor has to share the burden of GST and here also only if income is above 20 lakhs.
Reply
Anand Jain · 6 days ago
Why SEBI is trying to eliminate the Distributors every now & then there is new news if SEBI is so concerned then why it is not taking any action on misselling by Banks. It is very sad part that because of distributors & their efforts industry has reached at the point where it is and now SEBI trying to kill the retail participation by trying to eliminate the Distributors.
Shailesh Bajaj · 6 days ago
They are not bother about bank mis selling, insurance commission, but they very worried about less 1% annual commission earned by distributors..very sad . I feel SEBI is working under some big shots..
Samuel Asir Raj · 6 days ago
The very purpose of SEBI trying to regulate the advisory services is to safeguard the interest of the retail investors. To this end, they have to first regulate the institutional advisors like Banks and other financial institutions which are advising retail investors without any basic knowledge on Mutual Fund investments. Such institutions are advising on the basis of the instructions given by their top officials and sadly, on the desire to achieve the targets imposed on them. In my opinion, SEBI must revisit their present stand, in the interest of the safety for retail investors.
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Ashoke Kumar Basu · 6 days ago
Why SEBI isn't disclosing the complete fee structure of RIAs in front of the investors for any amount of investment into mutual fund schemes either by SIP or by lump sum mode!!!
snehal mistry · 6 days ago
yes sebi have disclose brokrage rate
Ashoke Kumar Basu · 6 days ago
Ok... Sir, will you please take the trouble to disclose that, if you don't mind anything ????
Reply
MURARI · 6 days ago
Mutual Funds appear to be so dangerous from the investment point of view as it appears from the directions received from higher ups. I think the Govt should ban mutual funds so that the investing community would be safe from this evil called mutual funds .
Dillip Kumar swain · 5 days ago
You are right sir
Anand Jain · 3 days ago
This will be the most effective step in investors favour.
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V Sreenivas Murthy · 6 days ago
What is the future of Regd. Mutual fund distributors..
is the distributor future end...
Even in this circumstances, many investors not believe Mutual fund investments, Distributor convenience them many ways..
mohammed faisal · 6 days ago
135 crore population and sebi reg RIA ( REGESTRED INVESTMENT ADVISOR ) 918 HOW CAN THIS RIA CAN 135 CRORE POPULATION TAKE CARE ?
INDIA AND US ( AMERICA ) OR EUROPE HOW CAN COMPARE ?
EDUATION LEVEL,UNDERSTANDING OF FINANCIAL MARKET, PRESENCE OF RIA IN WHICH CITY IN INDIA HOW MANY DISTRICT AND HOW MANY RIA 918 ?
WHAT IS THIS ?
ONLY IFA CAN PROVIDE LONG TERM GOOD SERVICE TO INVESTOR OF MUTUAL FUND IN INDIA WHY NOT SEBI MAKE BLUE PRINT TILL REACH RIA IN EROPE OR US PER ONE THOUSAND POPULATION 2 RIA IT MEANS IN INDIA 135 CRORE DIVIDED BY 2 = 27 lac RIA NEED AS PER INTERNATIONAL COMPARE,
AND IN INDIA DATA SHOW ONLY 918 RIA ?
HOW CAN TOOK ADVICE FROM THIS 918 RIA IN INDIA WHERE MORE THAN 70% IS ILTERATE IN FINANCIAL MARKET,
Amit Shah · 6 days ago
Look at from global perspective, RIA hande few number of investors under advisory module. One of the top five RIA having only 35 to 3500 investors. The number it self shows RIA module possible only for few
Of HNI or MNI set of investor's.Country like india where major of the investors are retail. Difficult to cater...
Fillip Kumar swain · 5 days ago
Super flop idea.....
Songita Paul · 5 days ago
I agree with Mr. Amit Shah nd Mr Mohammed Faisal. Penetration is only possible by IFAs. RIA module is a super flop concept. Songita Paul
ashok Singhal · 5 days ago
SEBI looks not in favor of small and medium size investors who feels comfortable with IFA's personal approach to them instead of RIA;s employee who can left the job or can be transferred to else where by his employer, employee of RIA neither possess personal training for selling a financial product nor free to sale a product suits to the need of the investor but compelled to sale a targeted product which has been given by his superiors. Does brokerage being paid to these RIAs are less than IFAs. I personally, have seen the investors wondering to bankers for after sale service because preceding Branch Manger took interest in selling but present BM has no interest and time to serve the investor for investment made by his predecessor, in this situation investors from small cities and towns who were started to turn towards MFs to invest in are deflecting. SEBI is following the Jawahar Lal Nehru's view of new India instead of Mahatma Gandhi's recommendations. India is a country where more number of hands whom jobs to be given not to eliminate the opportunities by mechanization.Sebi is doing the same by making a way to eliminate the IFAs by recommending the RIAs only competent for financial advising. Sebi must check the mis selling of these RIAs who are spoiling the market.
A V MANOHARAN · 3 days ago
Small Investors hereafter never reap up the benefit of capital market. MF industry will be deteriorated in course of time if SEBI ignored IFA and favouring Big shots influences
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