Investment advisory: Piece of advice, peace of mind
UK Sinha, chairman of the Securities and Exchange Board of India (Sebi) last week got a two-year extention as Sebi chief. Sinha has been working on many issues, and one of them is to build retail investors’ trust in the market and provide the desired handholding in terms of financial advisory being offered to them.
The regulator himself has been raking up the issue of building trust among investors and has made efforts to rid the investment advisory space free of conflicts of interest and mis-selling so that the consumers’ interests are protected and they get the best advice based on their risk profile. While a lot has been done on this front, there is still a lot more ground to be covered.
While the investment advisor regulation became a reality in 2013 where the regulator differentiated between an adviser and a distributor — demarcated their roles within the regulations — it is still in the process of evolution and has to take off.
The issues around financial advisory and distribution surfaced in line with the growth in markets. As the financial markets rose sharply in the five-year period between 2003 and 2007, sales of financial products such as mutual funds, insurance products etc gained momentum and with them came rising instances of mis-selling and other bad practices. While such