- SEBI chief warns decline in registered investment advisers since 2021 is a concern
- Investor survey shows 62% influenced by finfluencers, impacting trust and behaviour
- SEBI has eased rules for advisers and highlighted AI's growing role in advisory services
Securities and Exchange Board of India Chairman Tuhin Kanta Pandey on Monday again expressed concern over declining registered investment advisers and the increasing sway of finfluencers, calling the situation "undesirable" and "distortionary".
"It is a matter of concern that the number of registered investment advisers has declined since 2021. As India's investor base expands rapidly, our market needs more regulated advisers," Pandey said during a speech at an event organised by the Association of Registered Investment Advisers.
"Otherwise, the gap will be filled by unregulated voices like finfluencers who present opinion as expertise and speculation as strategy," he added.
The SEBI chief elaborated that there are around 1,000 registered investment advisers, including 470 individuals and 530 non-individuals. "While the number of registered IAs has declined in recent years, the shift towards non-individual entities points to a more institutional ecosystem. This transition is important because as our markets expand, investment advisory can no longer remain at the margins of the market," he said.
ALSO READ: 'Core To Capital Formation': SEBI Signals Next Phase Of AIF Regulation As Industry Scales
Investors Chasing 'Free' Advise
The SEBI chairman drew focus on an investor survey done by the market regulator that showed nearly 62% of prospective investors are influenced by finfluencers. "This is undesirable. It distorts investor behavior, weakens discipline, and erodes trust."
According to the SEBI chief, the turn towards finfluencers is a "cultural" phenomena as small investors tend to gravitate towards cost free recommendations as the habit of paid professional financial advice is still evolving in the country.
"The issue is not only regulatory, it is also cultural... The challenge is clear- make the registered advisory model viable, scalable, and attractive for qualified professionals," Pandey said.
Earlier this month, the SEBI chairman told NDTV Profit that unregulated finfluencers "sell dreams to people, often with false claims", contributing to heightened derivatives trading activity. He noted that many retail participants were paying for courses to learn options strategies, only to incur losses once they began trading in live markets.
SEBI's Regulatory Steps
To bring more qualified professionals into the regulatory fold, the SEBI has relaxed eligibility and documentation requirements. Transition from individual to non-individual form has been made easier and deposit requirements for IAs made lenient, Pandey said.
The chairman also highlighted the increasing role of artificial intelligence in advisory services across the world. New AI tools can process large volumes of data, support risk profiling, generate standardised recommendations, and answer routine questions, he noted.
Even though AI can deliver speed and consistency at low cost for template-driven services, investment advise is also about judgment, context, and trust, Pandey stressed.
ALSO READ: SEBI Regulates Intraday Borrowings For Mutual Funds; New Rules Effective April 1
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
