Whalesbook
Ad Code Woes
Registered investment advisors (RIAs) have approached the Securities and Exchange Board of India (Sebi) seeking significant regulatory recalibrations, including a review of stringent advertising guidelines and the implementation of graded compliance norms tailored for smaller entities. These discussions aim to alleviate the regulatory burden and improve the viability of the advisory business.
Industry participants flagged concerns regarding the current advertising code, which mandates prior approval for all advisor communications and involves associated fees. They advocate for a shift towards a voluntary code of conduct, contrasting this with the unchecked use of ambiguous titles like 'wealth architect' or 'wealth planner' by entities outside the RIA framework, creating an uneven playing field.
Call for Graded Compliance
The push for graded compliance highlights a disparity where advisors managing a small client base face identical regulatory requirements as those with extensive operations. This uniform approach, sources say, burdens advisors offering niche services like financial planning to the same degree as those focused on equity advisory.
Sector Growth Trajectory
Recent data indicates a pickup in RIA registrations following Sebi's December 2024 amendments to RIA regulations. Approximately 185 new advisors registered in 2025, a notable increase from 97 in the previous year. However, challenges persist, with 40 RIA applications still pending and a significant number of listed advisors yet to file periodic disclosures, including nearly 180 reporting zero fee revenue.
The advisory industry is also proactively working on establishing regulatory practice standards to foster greater uniformity and transparency across the ecosystem. While Sebi has not yet responded to emailed queries, industry insiders suggest a consultation paper may be forthcoming, signaling a potential for future policy shifts.
Despite the recent surge, the total number of RIAs remains relatively low against India's vast investor base, with 972 advisors listed with BSE. Some advisors have reportedly surrendered their licenses, migrating to the research analyst framework, often due to regulatory complexities or the pursuit of different business models.
Industry participants emphasized that RIAs are legally bound to provide unbiased advice aligned with client risk profiles and financial goals. They argue that ambiguous regulatory boundaries dilute fiduciary accountability and create inconsistent investor experiences, underscoring the need for clear, scalable, and appropriate regulatory frameworks.