The Securities and Exchange Board’s (Sebi’s) 7 October consultation paper (http://bit.ly/2dExDby) proposes that mutual fund distributors cannot offer advice or call themselves ‘advisers’ or ‘wealth managers’. And that those distributors who do offer investment advice will have to register with Sebi specifically as investment advisers—and won’t be able to earn trailing commissions. Sebi’s objective is simple—unbundle the advice from the execution, and make the investor aware of the fee he pays.
The distributor community is up in arms complaining that “clients don’t pay fees,” “how will we survive if we don’t earn commissions?” and “Sebi should work with distributors rather than against them.”