Seeking investment advice, know your rights

Under Sebi guidelines, all investment advisors are obligated to provide requisite details that are sought by investors.

Published: November 20, 2015 1:29 am
Investment advisers are required to keep such activities segregated from investment advisory and the advisory service has to be provided by a separately identifiable department or division (SIDD) or a subsidiary. Investment advisers are required to keep such activities segregated from investment advisory and the advisory service has to be provided by a separately identifiable department or division (SIDD) or a subsidiary.

Under Sebi guidelines, all investment advisors are obligated to provide requisite details that are sought by investors. Listed below are few disclosures recommended by Sebi (Investment Advisers) Regulations, 2013, that investors must check with their advisor at the time of making an investment.

Segregated distribution services
Investment advisers are required to keep such activities segregated from investment advisory and the advisory service has to be provided by a separately identifiable department or division (SIDD) or a subsidiary. Also, the client is not under any obligation to avail the distribution or execution services offered by the investment adviser or its affiliates. The adviser shall maintain an arms-length relationship between its activities as investment adviser and distribution or execution services.

Disclosures in respect of distribution or execution services
An investment adviser shall disclose to its client, any consideration by way of remuneration or compensation received by it or by its associates for any distribution or execution services in respect of the products or securities for which the investment advice is provided to the client.

Recommending services of other intermediaries
An adviser must, before recommending services of a stock broker or other intermediary to a client, disclose any consideration by way of remuneration or compensation or in any other form whatsoever, if any, received by the investment adviser from such intermediary.

Other disclosures
An investment adviser must disclose to the client its holding or position, if any, in the financial products or securities which are subject matter of advice. It will also disclose to the client any actual or potential conflicts of interest arising from any connection to or association with any issuer of products/securities, including any material information or facts that might compromise its objectivity or independence in the carrying on of investment advisory services.
Source: Sebi

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