Investors cautioned by SEBI to seek investment advice only from RIAs

The market regulator SEBI has urged investors to deal only with SEBI Registered Investment Advisers(RIAs)  to avail investment advisory services. In fact, the market regulator has urged people to look at the list of SEBI RIAs on its website before availing investment advisory services. Further, SEBI has advised investors to pay advisory fees through banking channels such as NEFT, IMPS or cheque and maintain the duly signed receipt with details of payments. As on May 2018, the total number of SEBI RIAs was 918 throughout the country. Of them, over half of them are individuals.

Do’s while dealing with Investment Advisers

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  1. 1. Always deal with SEBI registered Investment Advisers
  2. Check for SEBI registration number.

(Please refer to the list  of  all  SEBI  registered Investment Advisers which is available on SEBI website in the following link:

https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=13)

  1. Ensure that the Investment Adviser has a valid registration certificate.
  2. Pay only advisory fees to your Investment Adviser. Make payments of advisory fees  through  banking  channels  only  and  maintain  duly  signed  receipts  mentioning  the details of your payments.
  3. Always ask for your risk profiling before accepting investment advice. Insist that Investment Adviser provides advisory strictly on the basis of your risk profiling and take into account available investment alternatives.
  4. Ask  all  relevant  questions  and  clear  your  doubts  with  your n Investment  Adviser before acting on advice.
  5. Assess the risk–return   profile   of   the   investment   as   well as   the   liquidity and safety aspects before making investments.
  6. Insist on getting the terms and conditions in writing duly signed and stamped. Read these terms and conditions carefully particularly regarding advisory fees, advisory plans, category of recommendations etc. before dealing with any Investment Adviser.
  7. Be vigilant in your transactions.
  8. Approach the appropriate authorities for redressal of your doubts / grievances. Inform SEBI about Investment Advisers offering assured or guaranteed returns.

 SEBI recommended Don’ts

  1. Do not deal with unregistered entities.
  2. Don’t fall for stock tips offered under the pretext of investment advice.
  3. Don’t give your money for investment to the Investment Adviser. (Should be through banking channel only)
  4. Don’t fall for the promise of indicative or exorbitant or assured returns by the Investment Advisers. Don’t let greed overcome rational investment decisions.
  5. Don’t get carried away by luring advertisements or market rumours.
  6. Avoid doing  transactions  only  on  the  basis  of  phone  calls  or  messages  from  any Investment Adviser or its representatives.

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SEBI Notification link: https://www.sebi.gov.in/otherentry/nov-2018/do-s-and-don-ts-while-dealing-with-investment-advisers_41124.html

Related articles: https://cafemutual.com/news/industry/15067-sebi-cautions-investors-to-seek-investment-advice-only-from-rias

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three comments
  • Prakash Praharaj /

    Good Article..

  • Very good article for investors

  • Very much useful.

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