How to know you have the right investment advisor
How to know you have the right investment advisor
Planning your investments in a world that’s flooded with ‘best investment scheme for you’ can be daunting. Especially when even your bank Relationship Managers start promoting SIPs to invest in. Add to this the hidden targets and commissions that makes them mis-sell the products without considering the investor’s interests.
To protect investors like yourself from such mis-selling of products, SEBI regularised the investment game by issuing licences to Investment Advisers. They are skilled professionals whose guidance is based on your goals and risk profiling. Let’s know how you, as an investor, can differentiate an Investment Adviser from others.
Who is SEBI registered investment adviser?
An investment adviser is a firm or person that provides advice to investors about investing in securities – stocks, bonds, mutual funds, exchange traded funds (ETFs), and certain other investment products. They are provided licence under the investment adviser regulations in 2013.
Who is a Mutual Funds Distributor (MFD)?
According to NISM, an MFD is an individual or an entity facilitating buying and selling of units of mutual funds by investors. A distributor earns trail commission for bringing in investors into the mutual fund schemes.
Who issues fiduciary advice?
When it comes to investing, one would look for foolproof advice to depend on. This is possible with an RIA. They educate the client about every product, and its suitability for their goals. They issue an official advice that can be audited by SEBI. This is not applicable to MFDs. By definition, MFDs can’t advise clients to purchase a product. They can only educate potential investors about various products available in India, and facilitate its paperwork for them.
How do they earn income?
If you’ve been suggested multiple products under the same institute to invest in, you have been taking investment advice from an MFD who earns commission through every investment you make. On the other hand, an RIA will simply charge a fixed fee, suggested by SEBI to advise. Their objective is to ensure the advised product favours your investment objective. SEBI RIA’s advice works for investors and not commissions.
Who can tie-up with Mutual Fund Companies?
An MFD can collaborate with companies to promote their products, whereas an RIA works independently and in fact, can’t tie-up by law. There’s a probability that such collaborations may influence MFD’s advice to their investors resulting in negligence to protect investor’s interests. An RIA will only provide advice to invest which is regulated by SEBI.
Who to choose for your investment planning?
You deserve advice that’s purely meant to meet your investment objectives using any financial instrument. An RIA can help you get such unbiased advice. What more? All of their advice is safe to take as it’s regulated by SEBI.
If you’re looking for unbiased and transparent investment advice, opting for a SEBI RIA is ideal. They will answer all your concerns, help you learn about why a scheme is suitable for you and also maintain records of such communications to support your investment journey.
