It becomes important to choose the right investment advisor who would guide you along the right track while making crucial investment decisions. There are many investors who seek investment advice from various sources but not all investment advisors are legally authorised to provide investment recommendations.
The Securities and Exchange Board of India or SEBI shoulders the responsibility of controlling the securities market in India. The primary function of SEBI revolves around protecting the interests of investors who are investing in securities and also for promoting and regulating the securities market.
Why should you work with SEBI Registered Investment Adviser?
Providing ethical investment advice
The SEBI has implemented strict guidelines for the purpose of ensuring that investors receive investment advice that are professional as well as unbiased and also ethical. But why is it that you should work with SEBI Registered Investment Adviser? Let us find out the different reasons in the following sections and also see what sets these investment advisors apart from the other financial advisors.
Investing is no longer a simple operation like picking a few stocks and then hoping to grow your wealth over time. This is precisely the reason as to why professional guidance has become more valuable than ever before.
Transparency ensured
A SEBI Registered Investment Adviser is an individual or a firm who is registered with SEBI or Securities and Exchange Board of India and is authorised to provide investment advice, recommendations about financial planning and also portfolio management services. Such an advisor follows a model where they only earn a particular fee and that does not involve any kind of commission for recommending financial advice and the functioning of such a model is quite different from that which is followed by mutual fund distributors and other insurance agents.
Working with the Investment Advisors in Hyderabad
The responsibilities of Investment Advisors in Hyderabad include providing fiduciary as well as unbiased investment advice, conducting comprehensive risk profiling before any kind of investment recommendations are provided, ensuring that the investment advice aligns in a perfect manner with the financial goals and the risk tolerance of the investor, adhering to strict regulations set by SEBI and also to the various compliance requirements.
As per the SEBI Regulations, 2013, investment advice in India can be provided only by the SEBI Registered Investment Advisors. It clearly states that no firm or individual should provide financial advice without being registered with SEBI.
Avoiding the risks associated with fraudulent practices
The financial advisor who is registered with SEBI is monitored and regulated and thus compliance with professional as well as ethical standards is ensured. A financial advisor who is not registered with SEBI is not regulated or monitored and the risk associated with various fraudulent activities and mismanagement is further increased. In case you work with an unregistered financial advisor, then you do not have any kind of legal protection in case you suffer from any financial loss or receive any misleading guidance. Thus this makes it extremely important to verify whether the advisor from whom you are seeking financial advice is SEBI registered or not.
Working in the best interest of the investors
The best Investment Advisors in Hyderabad are the ones who have a fiduciary duty and this implies that they are legally required to work in the best interest of their clients or investors in this case and they just cannot sell financial products in order to obtain commissions.
The SEBI Registered Investment Adviser ensures that the advice which they offer is absolutely genuine as well as unbiased and such an advisor only earns from the fees of his or her client. There is transparency in the operations and the investor knows exactly what they are paying for, that is to say, for what kind of financial services, as there are hardly any hidden charges. Such an advisor ensures that the financial planning is goal-based and they do not just consider offering their services for the purpose of bringing about sales of a particular financial product.
The way of working of a financial advisor who is registered with SEBI is quite different from that of the mutual fund distributors, the insurance agents as well as the bank relationship managers who consider prioritising the selling of only those financial products that give them the highest commission but not that which is in the best interest of their clients.
Considering the risk appetite
Investment advice revolves around more than just picking the best stocks or even the mutual funds. Instead it should match the risk tolerance, the investment horizon as well as the financial goals of the investor. The investment advisor registered with SEBI conducts a detailed risk profiling of the investors before making any kind of investment recommendations.
Such risk profiling by the Investment Advisors in Hyderabad ensures that the investor receives personalised investment advice and not just generic recommendations about the financial products. It ensures that the portfolio that is built is based on the various financial needs of the investor and not on what is being promoted in the market. Risks that are unnecessary and those that do not align with the economic potential of the investor can easily be avoided. In the absence of proper risk profiling, it could lead the investor to making financial decisions that do not align with their financial goals and those that are long-term ones.
Adhering to strict ethical guidelines
The investment advisor registered with SEBI adheres to strict compliance regulations and it is ensured that the advice that is being offered is in line with the ethical standards of SEBI. The investment advisor needs to conduct annual audits and needs to report to SEBI. The advisor needs to maintain complete transparency and there needs to be full disclosure of the commissions and the fees. Proper documentation needs to be maintained. Such operations ensure that the investors are protected from fraudulent activities and also from misleading advice. It is also ensured that you receive the services of a qualified investment advisor who abides by the ethical guidelines set by SEBI.
An investment advisor who is not registered with SEBI could prove to be an option that is much riskier as the advisor is not bound to follow the strict guidelines of SEBI and also in case of any kind of fraudulent activity, the investors do not get the option to follow the legal course of action.
Final Note
The financial future is heavily dependent on the kind of investment choice that is made and also on the quality of the investment advice that is received. When you work with an investment advisor who is registered with SEBI, it is ensured that your advisor works under the SEBI regulations and you receive transparent and goal-based advice associated with financial planning.
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