Registered Investment advisors is a concept introduced by SEBI in 2013 to ensure that investors’ interests are protected. An RIA can be an individual or a company. The registration process involves validating the identity, networth and credentials of the advisor company. An investor has many advantages when he/she opts for a SEBI registered investment advisor.
A registered investment advisor must have the qualifications stipulated by SEBI. This ensures that Financial advisor understands complex financial products and can advise thereon to his clients.
The advisor will provide investment advice to the client after risk profiling. Complex financial products should be recommended after analyzing the clients experience, knowledge, investment objectives, risk appetite and capacity for absorbing loss.
A Registered investment advisor needs to maintain an arms-length relationship between his activities as an investment advisor and other activities. The advisor will need to disclose any conflict of interest associated with investment advisory activities to the client.
SEBI audits advisory quality ,capital adequacy and infrastructure support of advisors. It audits their advisory quality and financial transactions on a regular basis. This protects investors from front running and other financial frauds. SEBI may cancel the investment advisor’s certificate for non-compliance.