Source: ET
Context:
The Securities and Exchange Board of India (SEBI) has relaxed educational requirements for Investment Advisors (IAs) and Research Analysts (RAs). This move aims to broaden the talent pool while maintaining professional standards in the capital markets.
Investment Advisors vs Research Analysts
| Feature | Investment Advisor (IA) | Research Analyst (RA) |
|---|---|---|
| Primary Role | Provides personalized investment advice to clients based on their financial goals, risk profile, and market conditions. | Conducts research and analysis of securities, industries, and markets to publish reports and recommendations. |
| Client Interaction | Directly interacts with individual or institutional clients to guide investment decisions. | Typically interacts with brokers, fund managers, or the public through published research; limited direct client advisory. |
| Regulatory Registration | Registered with SEBI as an Investment Advisor under SEBI (Investment Advisers) Regulations, 2013. | Registered with SEBI as a Research Analyst under SEBI (Research Analysts) Regulations, 2014. |
| Services Offered | Personalized portfolio planning, asset allocation, investment recommendations, risk management. | Investment reports, security ratings, target prices, sectoral/stock analysis, market outlook. |
| Fee/Compensation | May charge advisory fees, subscription fees, or a percentage of assets under advice; cannot earn brokerage or commissions. | Earns salary, consultancy, or commission from publishing reports; cannot give personalized advice to individual clients. |
| Scope of Advice | Holistic financial guidance covering multiple asset classes (equities, debt, mutual funds, insurance, etc.). | Focused on specific securities or market sectors; does not provide end-to-end financial planning. |
| Accountability | Liable for client losses if advice violates SEBI regulations or suitability norms. | Liable for accuracy and integrity of research reports; must avoid conflict of interest. |
Educational Qualification Relaxed
- Graduates from any discipline can now apply for registration as:
- Investment Advisors (IAs)
- Research Analysts (RAs)
- Earlier, only candidates with specific finance, economics, or related educational backgrounds were eligible.
Mandatory Certification Remains
- Despite the relaxation, candidates must still pass the NISM certification exam.
- Ensures that all IAs and RAs have the necessary domain knowledge and professional preparedness.
Objective of the Change
- Encourage more participation in capital market advisory and research roles.
- Balance inclusivity and competence: While educational barriers are lowered, knowledge standards are upheld through mandatory certification.
