SEBI may ease the rules for Registered Investment Advisors (RIAs). The market regulator has issued a consultation paper on this on August 6. It says that there is a need to increase the number of registered investment advisors in the country.
According to SEBI’s website, there are only 961 RIAs in the country right now. Due to the low number of RIAs, people fall prey to fake experts who advise investors to invest according to their own benefits. Especially in the last few years, the number of such fake experts has increased rapidly on social media platforms.
These changes may happen in the rules
SEBI can fix the condition of only graduate degree instead of post-graduate degree for RIA. It has also been said in the consultation paper that the condition of work experience for RIA can also be removed. This will be a big concession, because there are conditions like post-graduation and five years of work experience for RIA. Experts say that if the market regulator implements these proposals, then it will increase people’s interest in the profession of RIA.
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The number of RIAs will increase
With the implementation of the new rule, corporate RIAs can recruit junior RIAs. With this, students can show interest in becoming RIAs after completing their studies. Due to the condition of work experience, many corporate RIAs are not able to keep new people in their office. On the other hand, RIAs demand a hefty salary to work under corporate RIAs.
There may also be relaxation in the rules of certification
Currently, it is mandatory for an RIA to have a certificate of financial planning. He can obtain a certificate from National Institute of Securities Market (NISM) or any other accredited institute like Certified Financial Planner. However, nothing has been said about this in SEBI’s consultation paper. But, it is believed that relaxation can also be given in the condition related to the certificate. SEBI can also remove the condition of RIA renewing his certificate every year. Currently, one has to appear in an exam every year to renew the certificate.
The rules for collecting fees will also be easy
SEBI can also simplify the rules for RIAs to charge fees from clients. Currently, RIAs charge a certain percentage of the client’s total asset value as fees. Some RIAs also charge fixed fees. This maximum can be Rs 1.25 lakh per family per year. If an RIA wants to change the way it charges fees from clients, it can do so. Currently, changes are not allowed for more than 12 months.
