SUBSCRIBE NEWSLETTER
  • Change Language
  • English
  • Hindi
  • Marathi
  • Gujarati
  • Punjabi
  • Tamil
  • Telugu
  • Bengali
  • MF News RIAs can only deal with security market products: SEBI

    RIAs can only deal with security market products: SEBI

    Also, stock tippers will no longer call themselves advisors.
    Nishant Patnaik Oct 1, 2024

    Listen to this article

    SEBI has provided clarity on the scope of advice given by registered investment advisors (RIAs)

    In its board meeting held today, SEBI said that RIAs can only deal with security market products regulated by SEBI. This means RIAs cannot offer other services like estate planning, will making and tax planning, which are part and parcel of the comprehensive financial plan.

    In its draft regulations, SEBI did propose that RIAs can deal with unregulated products only after creating a separate company and maintaining arm’s length relationship with that entity.

    Another major development is that stock tippers (largely Indore, Bhopal and Jaipur based stock tipping companies) cannot call themselves RIAs. They will have to obtain a research analyst license to offer such services.

    SEBI has also relaxed certain norms for RIAs to facilitate ease of doing business. Let us look at them:

    • A person having a graduate degree can become an individual RIAs or principal officer of a RIA firm
    • Further, there is no need to have prior experience to become RIAs or associate with RIAs (employees)
    • No recurring examination at the time of renewal. While applicants have to obtain NISM XA and XB examination to get RIA license, a certification on incremental changes and development will be sufficient for renewal
    • Increase in number of clients from 150 to 300 for corporatization of business for individual RIAs
    • Insurance agents, CAs and other professionals like teachers who are not directly related to the securities markets to become part time registered investment advisers (RIAs)
    • Reduced net worth requirement for both individuals and corporates
    • RIAs can now change the mode of charging fees for a client at any time without any restriction. RIAs are allowed to offer two models on fees Rs.1.25 lakh per annum or 2.50% per annum on assets under advisory.
    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

    Click to clap
    Disclaimer: Cafemutual is an industry platform of mutual fund professionals. Our visitors are requested to maintain the decorum of the platform when expressing their thoughts and commenting on articles. Viewers are advised to refrain from making defamatory allegations against individuals. Those making abusive language or defamatory allegations will be blocked from accessing the web site.
    2 Comments
    DEBRAJSENGUPTA · 5 days ago `
    Allowing Insurance Agents offering part time RIA license can actually create confusion among clients as many of the Insurers prefer the commission base agency channel and/or Bank assurance mode. SEBI should work hand-in-hand with IRDAI to formulate a strategy where the Agents and/or Bank assurance model can offer cheaper variants of Insurance policies without any restrictions on plan type. This will help the end customers buy policies which are not unnecessarily marked up with additional cost [ a majority goes into paying hefty commissions]. Also, this will attract quality workforce who are not interested in upfront reward in terms of commissions only.
    Madhu Uniyal · 5 days ago `
    Can a Authorised Person in Stock Broking become Part Time RIA
    Login or Sign up to post comments.
    More than 2,07,000 of your industry peers are staying on top of their game by receiving daily tips, ideas and articles on growth strategies. Join them and stay updated by subscribing to Cafemutual newsletters.

    Fill in the below details or write to newsdesk@cafemutual.com and subscribe to Cafemutual Newsletter now.
    Cafemutual is an independent media platform and focuses on providing knowledge and information for the benefit of finance professionals. We do not promote any particular brand or asset category.