SEBI Registered Investment Advisor vs Stock Broker vs Dealers: What should you consider?

A lot of times, people confuse a stock broker and dealer to SEBI registered investment advisor. These are very different roles and they are not at all similar by any chance. In this article we will understand the roles and responsibilities of SEBI registered stock advisory company, a stock broker and stock dealer.

Who is a SEBI registered investment advisor?

SEBI registered investment advisor is registered with SEBI (Securities & Exchange Board of India) and assigned a SEBI registration number.

Any investor would want the best SEBI registered Investment advisor for his or her portfolio and the search of the advisor starts from verifying whether advisor is registered with SEBI. 

Alpha Invesco has registered itself with SEBI and our SEBI registration number is: INA000003106. To verify the authenticity of a SEBI registered advisory company, you can go on the website of SEBI and verify the registration of your advisor. 

Further, a SEBI registered stock advisory company has to write the NISM – Series- X-A: Investment Adviser (Level 1) Certification Examination, post which they are eligible for doing business as a SEBI stock advisory company. 

An associated person from the stock advisory company shall be required to pass both the levels (i.e. NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination and NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination) to fulfill the requirements under Regulation 7(2) of the SEBI (Investment Advisers) Regulations, 2013.

SEBI Registered investment advisor vs Stock Broker

It is nowhere written that a stock broker cannot recommend stocks to an investor just like a SEBI registered investment advisor. Stock brokers play a crucial role in executing trades for an investor. Buying stocks recommended by your broker may make you money or may not make you money. . 

Stock brokers help an investor execute trades and try to buy stocks at prices which maximizes the return for an investor. 

Stock brokers are compensated on a per trade basis, where their income is proportional to numbers of trades they execute on their clients behalf, it will be wrong to say that a broker is incentivized to increase the churn in an investor’s portfolio, therefore it is highly important for an investor to feel comfortable from within when he is buying or selling stocks. 

SEBI registered Investment advisors has no role in trade execution; therefore the incentives are aligned to get the best price and maximize returns.

SEBI registered investment advisor vs Stock Dealer

Stock Dealer are people who buy and sell stocks for their own account, whether through a broker or otherwise and SEBI registered investment advisor are advisors who advice clients on their portfolio and try to maximize returns for investors. A dealer acts as a principal in trading for its own account, as opposed to a broker who acts as an agent who executes orders on behalf of its clients.

Stock dealers are important figures in the market. They make market in the securities, underwrite securities etc. stock dealers provide the bid and ask quotes you see when you look up the price of a security in the OTC market. Stock dealers are critical for market liquidity and boost long term growth.

SEBI Registered Advisory Company as a Sub Broker

There can instances where timely trade execution becomes critical and investors may lose few percentage points due to weakness in carrying out timely trades by the brokers. To cite one such example, your SEBI registered Investment advisor may want to execute a tactical trade and any time lapse may spoil chances to maximize returns, in such instances, your SEBI registered Investment advisor can become a sub broker by entering into a partnership with a broker and take control of trade execution on investors behalf.

It is advisable for the investor to understand the nature of partnership he is getting into with the SEBI registered investment advisor, it could be an advisory relationship with aligned interest and fee based compensation, it could also be a relationship where in the SEBI registered investment advisor is an advisor and also a sub broker.

Disclaimers :

The information herein is used as per the available sources of, company’s annual reports & other public database sources. Alpha Invesco is not responsible for any discrepancy in the above mentioned data. Investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents

Future estimates mentioned herein are personal opinions & views of the author. For queries / grievances  – or call our support desk at 020-65108952.

SEBI registration No : INA000003106

Readers are responsible for all outcomes arising of buying / selling of particular scrip / scrips mentioned here in. This report indicates opinion of the author & is not a recommendation to buy or sell securities. Alpha Invesco & its representatives do not have any vested interest in above mentioned securities at the time of this publication, and none of its directors, associates have any positions / financial interest in the securities mentioned above. 

Alpha Invesco, or it’s associates are not paid or compensated at any point of time, or in last 12 months by any way from the companies mentioned in the report.

Alpha Invesco & it’s representatives do not have more than 1% of the company’s total shareholding. Company ownership of the stock : No, Served as a director / employee of the mentioned companies in the report : No. Any material conflict of interest at the time of publishing the report : No.

The views expressed in this post accurately reflect the authors personal views about any and all of the subject securities or issuers; and no part of the compensations, if any was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.

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