'Sebi's proposed changes to investor advisory norms welcome'

Market regulator Sebi's proposed changes to investment advisory norms will help streamline the sector and make it more consumer-centric, the Financial Planning Standards Board India said today.
"Sebi's efforts to bring the financial planning services, under any garb, within the purview of the Investment Advisory Regulations are well appreciated," FPSB India said in a statement.
"Terms such as Financial Planning, Financial Planner, among others are being used in India indiscriminately and that leads to a lot of confusion amongst the consumers," it added.
To keep checks and balances on investment advisory (IA) services, the Securities and Exchange Board of India (Sebi) had issued a consultation paper in October proposing an overhaul of regulations governing investment advisors.

Various norms proposed by Sebi under IA regulations such as mandatory registration of mutual fund distributors giving incidental advice on MF products has met with strong criticism from MF and financial advisory bodies, who contend that the move would push out 80-90 per cent distributors out of business.
However, FPSB, which provides financial planning programmes, said that the proposed removal of 'incidental advice' by the distributors and other professionals is a welcome step that would "protect the investors from getting advice that may not necessarily be in their best interests".

"Incidental or limited advice is prone to misuse and has been viewed in the context of the prevalence of mis-selling," it noted.

It also said that investment advice, like medical advice, meted out in popular, public and social media needs to be discouraged as this is best left to the experts.
Among others, FPSB India opined that risk profiling is an important constituent of financial planning and therefore in the regulations, there is a scope to define the tools and processes for the same to avoid any ambiguities.
"There is also an opportunity to establish investment advisor class mutual funds, exclusively for the investment advisors," it said.
FPSB India is a not-for-profit company set up by 44 leading financial institutions including LIC, SBI, UTI AMC, ICICI Group and Axis Bank.