Revisiting IA regulations: Why part-time advisors may not be the answer
The Investment Adviser (IA) Regulations, 2013, has been around for 11-plus years now, but has been able to attract just about 960 advisors!
The latest consultation paper on IA Regulation is attempting to do a course correction by bringing down the eligibility criteria in terms of education, doing away with the experience requirement completely, and passing the certification exams just once. There are a host of other changes as well, many of them positive, that will now give the much-needed lift to the advisory profession.
However, the consultation paper has struck a few discordant notes, too, which need a relook. I would focus my attention on just one of them in this piece—Part-time Investment Adviser (IA).
There is a fundamental problem that is embedded in the initial regulation itself, where investment advice is defined as: “Investment advice means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning."
This definition focusses on products, transaction, portfolio advice and, lastly, comes to financial planning as an after-thought. In fact, the term investment adviser itself is a misnomer as that again indicates a focus on investment products, their selection, portfolio construction, etc.
If the intention was to provide holistic financial advice, considering the needs of the customer and their family, we should be referred to as financial planners, not investment advisers.
I have brought this up as this is connected with the part-time IA
Read more on livemint.com
