Investment advisors seek graded compliance, ad-code relaxations from Sebi

Investment advisors have urged Sebi to ease ad-code rules and introduce graded compliance, arguing uniform regulations hurt smaller players and limit the sector's growth

Following recent reforms aimed at easing entry barriers, investment advisors have sought a fresh set of relaxations from the market regulator, Securities and Exchange Board of India (Sebi), including a review of advertising guidelines and the introduction of graded compliance norms for smaller players to reduce regulatory burden.

 

Registered investment advisors (RIAs) recently met Sebi to flag concerns around the viability and scalability of the advisory business in India. The discussions come after Sebi amended the RIA regulations in December 2024, easing eligibility norms and documentation requirements.

 

One of the key demands relates to the advertising code, which currently requires prior approval from the administrative body for advisors’ communications. RIAs are seeking to convert this into a voluntary code of conduct, rather than a mandatory pre-approval process for every communication, sources said.

 

 

“While registered advisors are not allowed to do advertisments without approval, several ambiguous terms such as wealth architect or wealth planner are freely used to offer investment-related advice. In addition, RIAs must seek approval for every communication or advertisement and also pay a fee for it,” said an industry participant, requesting anonymity.

 

Another major ask is the introduction of graded regulations to ease compliance for smaller advisors.

 

“An advisor with 25 clients is subject to the same regulatory requirements as one with multiple licences and lakhs of clients. Similarly, someone offering only financial planning is burdened with the same compliance framework as an equity-focused advisor,” said a source familiar with the discussions.

 

The industry is also working on regulatory practice standards to bring greater uniformity and transparency across the advisory ecosystem.

 

Emailed queries to Sebi remained unanswered till press time.

 

Following the earlier relaxations, the number of registered RIAs has seen a pickup. About 185 new advisors were registered in 2025, compared with 97 in 2024, according to data from the Association of Registered Investment Advisors (ARIA).

 

The pace of registrations also accelerated in the last three months of 2025, with double-digit monthly additions.

 

As of December 31, 2025, around 40 RIA registration applications were pending with Sebi. Registration with the regulator is mandatory for providing investment advice and financial planning services in India.

 

“Certain expectations and requests have been submitted to Sebi, and discussions are ongoing with other intermediaries. A consultation paper may follow,” said another source privy to the matter.

 

Despite the recent increase, the overall number of RIAs remains low relative to India’s investor base. There are currently 972 investment advisors listed with BSE, which serves as the administrative body.

 

As of March 2025, only 660 RIAs had filed their periodic regulatory disclosures, of which nearly 180 reported nil fee revenue.

 

Industry insiders attribute the low count partly to the surrender of RIA licences, as several advisors offering stock tips opted to migrate to the research analyst registration framework.

 

“Investors need to realise that an RIA is legally obligated to provide unbiased advice based on an individual’s risk profile and financial goals. The lack of clear regulatory boundaries leads to inconsistent investor experiences, diluted fiduciary accountability, and an uneven playing field between regulated advisers and distributors,” a spokesperson from ARIA said when contacted for comments.  

Under review

 

• RIAs flag ad curbs, call for voluntary code of conduct on communications
• Graded norms requested to ease compliance for smaller players
• Regulatory practice standard also in the works
• Following reforms on entry hurdles, advisor registrations surged by 185 in 2025 vs 97 in 2024
• 40 applications pending with the regulator as of December, 2025