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Financial advisers ask Sebi to extend deadline for renewal of certification

According to experts, renewal of certification through CPE points is a globally accepted norm

Topics
financial advisors | Sebi | portfolio management services

Ashley Coutinho  |  Mumbai 

Sebi
Many RIAs are now gearing up to give NISM Series XA and XB exams for investment advisors to renew their certification.

The Association of Registered Investment Advisers (ARIA) has written to the Securities and Exchange Board of India (Sebi) asking it to extend the deadline for advisers looking to renew their certification by a year. As things stand, advisers have to clear exams for renewal.

According to the investment adviser (IA) guidelines issued in July, such persons should have at all times a certification on financial planning or fund or asset or portfolio management or investment advisory services from the National Institute of Securities (NISM) or any other institution, including the Financial Planning Standards Board of India (FPSB).

said fresh certification should be obtained before the expiry of the existing one to ensure continuity in compliance. It, however, has disallowed advisers using continuing professional education (CPE) from obtaining fresh certification.

Many RIAs are now gearing up to give NISM’s Series XA and XB exams to renew their certification. Several are struggling to get the desired dates or examination centres to write the exams.

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“Advisers have no option but to clear NISM’s XA and XB exams. The problem is that dates for nearby examination centres are not readily available, and advisers may have to travel to far-flung locations, which is inadvisable in a time like this. So, you may suddenly find a number of financial advisers who have not been able to get a fresh certification and, therefore, technically, are not qualified to give financial advice. We have, therefore, asked to grant us an additional year to renew our certifications,” said Lovaii Navlakhi, founder, International Money Matters, a registered advisory firm, and board member of ARIA.

According to experts, renewal through CPE points is a globally accepted norm. FPSB, which issues the certified financial planning (CFP) certification, for instance, allows members to renew membership each year if they earn 15 CPE points during the year. This requirement becomes due immediately from the first year of certification and needs to be completed at least one month before the renewal date. The points can be obtained by attending webinars, conferences, and writing for professional journals.

However, advisers cannot use these CPE points to renew their certification. Also, FPSB does not have a provision for candidates who have already been certified to take exams again.

“Making advisers write the exams all over again is not feasible. This will especially inconvenience senior professionals who may have acquired a professional certification several years ago. Not clearing the exam is a risk that some advisers will face — not due to incompetence, but due to the fact that they oversee the work and may not get into the nitty-gritty of calculations,” said Suresh Sadagopan, a financial planner and ARIA board member. Sebi has also mandated other requirements — such as cap on fees, number of clients, net worth criteria — that could make life difficult for individual advisers.

Tough road ahead

  • ARIA has requested Sebi to defer requirement to renew certification by a year
  • New guidelines say those involved in investment advising must have a financial planning certificate
  • Such certification must be renewed before expiry
  • RIAs have to clear NISM Series XA ad XB exams to renew their certification
  • There are 1,200-1,300 RIAs in the country

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First Published: Mon, November 02 2020. 18:46 IST
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