SEBI has started issuing registration certificates to those who meet the criteria under SEBI Investment Adviser Regulation.
Prakash Praharaj and Kavitha Menon from Mumbai and M S Shabbir from Hyderabad are among the first crop of advisors to get SEBI registration certificate as Investment Advisers. M S Shabbir had applied in April while Prakash had filed his application in May.
SEBI has published the status of 20 applicants. Click here to see the list. According to industry estimates, not more than 30 have applied with SEBI.
“Individuals can’t act as both investment adviser and distributor. So a family member can take ARN to receive trail commission. The assets have to be transferred to the family member,” says M S Shabbir of SenSage Financial Services. In SenSage’s case, Shabbir’s daughter Lubna will act as Investment Adviser as she has the necessary qualifications.
Shabbir is of the view that individuals should not rush to register as Investment Advisers because the liability (in case the investor files a complaint) could be unlimited.
Very few national distributors and wealth management firms have applied so far. Among those who have filed application are Principal Retirement Advisors, Edelweiss Investment Adviser and ICICI Securities. Banks are conspicuous by their absence in the list.
Since SEBI has provided an exemption, many distributors have not felt the need to register with SEBI. “Any distributor of mutual funds, who is a member of a self-regulatory organization recognized by the Board or is registered with an association of asset management companies of mutual funds, providing any investment advice to its clients incidental to its primary activity,” states SEBI.
“There are a lot of grey areas. We are evaluating the pros and cons. The advantages of registering with SEBI may be hard to measure as of now,” Vishal Dhawan of Plan Ahead Wealth Advisors.
The SEBI Investment Adviser Regulation came into effect from April 21, 2013. With the implementation of these regulations, people who have not registered with SEBI are not allowed to use the term ‘adviser’ or ‘Investment Adviser’.
Do you plan to register as Investment Adviser? What in your views are the advantages or disadvantages of becoming a SEBI registered Investment Adviser? Post your views and comments now!
