India’s capital markets regulator SEBI has floated a set of proposals to ease entry barriers and simplify compliance for investment advisors (IAs) and research analysts (RAs). Among the key suggestions is an update to who qualifies to register — with the scope now set to include professionals from non-finance backgrounds such as law and engineering.
So far, eligibility for becoming a SEBI-registered advisor was largely limited to those from finance, commerce, or economics streams. The new draft allows anyone with a degree in any discipline to register, as long as they clear the required certification exams conducted by the National Institute of Securities Markets (NISM).
Furthermore, SEBI has suggested that NISM may also recognise training programmes by other institutions, not just its own certifications, as valid qualifications.
Another shift on the cards is around how past performance is shared. SEBI has proposed allowing IAs and RAs to disclose historical returns — but only when specifically requested, and only in one-on-one discussions. Such performance data must be clearly tagged with disclaimers and can only refer to periods before the regulator’s performance verification body was established.
The idea here seems to be balancing transparency with caution — giving clients access to past records, without creating misleading narratives in public marketing material.
In a significant tweak, SEBI has proposed allowing investment advisors to offer paid second opinions on portfolios that were sold by distributors. This is a grey area under the current fee-based advisory regulations. If approved, advisors will be allowed to charge up to 2.5% of the asset value annually for these reviews, without needing to classify them under regular advisory contracts.
This could open a new revenue stream for IAs who have until now avoided such engagements for fear of non-compliance.
Once an individual advisor crosses the 300-client mark, SEBI rules mandate a shift to a non-individual registration. That process has so far been paperwork heavy. SEBI now proposes trimming the list of requirements — removing the need for multiple address proofs, office space documentation, credit score records, income tax returns, and net worth declarations.
SEBI has invited comments from stakeholders and the general public on these proposals. While nothing is final yet, the direction of these changes suggests a broader attempt to make India’s advisory ecosystem more accessible, diverse, and responsive to market needs.
