Financial planners stay away from registration with Sebi

Eleven months since the Securities and Exchange Board of India (Sebi) came out with its investment adviser regulations, the markets regulator has managed to get just 49 investment advisers registered with itself while another 20 are in the process of doing so, out of the several thousands that are eligible.

Factors such as higher regulatory requirements, compliance, fee model of remuneration not picking up and their distribution business at stake, are putting off the planners who see little merit in registering themselves.

Apart from clear lack of enthusiasm to get registered, those going ahead with the registration have clearly decided against doing so at the cost of their distribution business, which they are transferring to a firm registered in an alternate name — that of wife, relative or a partner.

While the regulations permitted those certified by the National Institute of Securities Marekets (NISM) or by institutes accredited to NISM to register as investment advisers, Sebi relaxed the norm for existing advisers who could register first and get the certification within two years.

That too, has not been attractive enough.

When asked if Sebi was disappointed with the numbers, a Sebi official, on conditions of anonymity, said, "For now, people may be looking to work as distributors but we hope that gradually they will become advisers and the numbers will grow. Some banks have also applied."

Sebi's investment advisory regulations make registration mandatory before offering investment advice. It also puts in an "arm's length" condition on relationships with other businesses. That is easier said than done, which is the major hurdle in getting planners to register.

Planners are looking at ways to work around the regulations to continue with both distribution and advisory businesses. They are wary of losing their income from commissions, built over several years.

Source ::The Indian Express