Market regulator SEBI, which is proposing to amend its norms for investment advisors, has also relaxed the educational qualifications required for employees of registered investment advisers.

According to the proposed norms, mutual fund distributors should not give any investment advice and should only explain the features of the MF schemes. They can distribute suitable schemes to investors describing material facts of the scheme and the associated risk factors of the scheme.

The market regulator has said employees of registered investment advisors should be graduate in any discipline.

Currently, they have to be a post-graduate or a graduate with five years experience in the financial services industry. However, for individual advisor, the current rule continues to apply, SEBI clarified.

Investment advisors will have to segregate their advisory and product distribution businesses.

If the proposals are amended, banks, NBFCs and various corporate bodies would have to set up a separate subsidiary for investment advisory services. At present, these services can be provided through a separate division or department.

SEBI has also given six months time to existing entities to set up a separate subsidiary to offer investment advisory services.

“Mutual fund distributors who want to get registered as investment advisors shall be allowed to receive trail commission for the products already distributed, subject to disclosure to the clients,” SEBI said. Besides, the regulator has suggested that agencies providing ranking of MF schemes need to be registered under research analyst norms

Related Topics
comment COMMENT NOW