SEBI Suggests Rules Relaxation for Investment Advisors

The Securities and Exchange Board of India (SEBI), which oversees the country’s capital markets, has suggested relaxing the rules and limitations pertaining to registered investment advisors (RIAs). 

SEBI’s recommendations follow many voices from India’s small investment advisory community raising concerns about unnecessarily stringent regulations that have been in place for far too long.

In order to serve a sizable investor base, SEBI stated in a consultation document published on August 6 that India needs more RIAs and has made important key proposals. 

Reducing the requirements for qualification and past experience

SEBI has suggested that a new RIA should simply require a graduate degree, rather than the current post-graduate degree requirement. Furthermore, SEBI has suggested that work experience be waived for RIAs.

This is a significant give-in. Currently, RIAs need to have five years of relevant job experience in addition to a post-graduate degree. For “persons associated with investment advice,” which includes junior to mid-level customer-facing staff like relationship advisors or para-planners as they are known in the investment advisory circle, the requirements are slightly less stringent; two years of relevant experience is a prerequisite. 

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If approved, this would make it simple for new RIAs to enter the field. Additionally, it would enable corporate RIAs to hire recent college graduates at the junior level as para-planners and teach them on the job. Many corporate RIAs were reluctant to hire new employees because of the work experience requirement because the new people would have high wage expectations.