SEBI Registered Investment Advisor | Get The Best Advisory Services

In India, SEBI registered investment advisor is referred,  when an investor who would like advice on where to invest in share market or an investor who would like to keep up with the latest trends in the stock market.

SEBI Registered Investment Advisor – Current Dilemma:

Indian stock market investors face a huge gap when it comes to seeking investment advice. There is a plethora of online investment advisors who offer get rich quick schemes, sure shot multibagger stock tips, and whatnot. Also, quite often most of you must have received calls from dubious stock advisory firms which promise quick returns by trading in ‘share market’. 

Also, when it comes to financial advice, wealth management solutions including financial planning, retirement planning, things can get really tricky if you are not doing enough due diligence. Investors will find many distributors or agents operating under the name of financial advisor. They don’t charge you any fees but get fat commissions by selling various financial products like mutual funds, insurance, structured products.

Most often, investors goals are ignored in commission-based models. Investment advisors tend to push for products where they get large commissions. So it is critical to check the business model of the investment advisor you are dealing with. If it’s a pure fees-based advice, then you are in safe hands. But if it’s a distributor led model, or your bank’s relationship manager selling you the product, you must be on alert. 

Given this background, it is very important that investors chose their investment advisor wisely. SEBI Registered Investment Advisors (SEBI RIA’s) are held accountable when it comes to compliance, minimum qualification criteria’s, standard operating procedures, disclosure standards etc. But they do not reflect the experience, and accuracy & ethics of the investment advisor. Mere SEBI registration of an advisor is not enough. Investors must study the credentials of SEBI registered investment advisor on multiple parameters.

Is SEBI Registration Enough To Ensure Authenticity of the Investment Advisor?

All investment advisors go through a rigorous screening process while applying to SEBI. However a mere certification is not enough. Investors must check following things as well – 

1] Track Record of SEBI registered Investment Advisor Over Multiple Investment Cycles:

Stock markets & economy are prone to cyclicality. A SEBI registered investment advisor who is new to the market, may not understand the complexities of equities & rapidly changing nature of businesses. 

Advisor who has done well in a particular investment environment, may not do well later on. So look at the track record over 7-8 years or more. Last 2-3 year performance, positive or negative, doesn’t tell you anything about advisors ability to make money for you. An experienced SEBI registered investment advisor adapts to the changing environment & makes portfolio changes accordingly.

2] Search for Information in the Public Domain:

If the SEBI registered investment advisor is reputed & comes with a long-term track record, they will have articles / presentations & interviews in the media. Look out for such information. Be cautious of a completely unknown entities unless you have a very strong referral from someone you know. 

3] Sure Shot Multibagger Stock Tips, Guaranteed Returns in Stocks with Short Term Trading ? Stay away! :

A good SEBI registered investment advisor will never promise you the moon. There is no such thing as a sure shot returns in stock market investing. If someone is trying to convince you that money can be made by short term trading, futures & options – just run away. 

If you study the history of all successful stock market investors, all of them have made wealth only from long term investments. Barring one or two exceptions, no one has ever made money by speculating for short term movements. 

Remember, you may not be the exception! While we celebrate 1% successful traders, 99% fail at it. Do you want to play a game where 99% fail? 

4] Setting Return Expectations of a Client:

A good SEBI registered investment advisor will always talk about returns over a period of time. Stock markets are volatile, and they do not provide year on year return like a bank fixed deposit. In one year investor may make 50% return, but in another year you investor may be down by -20%. Ultimately it is the compounded returns over a period of 5-10 years that matter. 

It works both ways. If an investor is expecting a very high rate of return, and the advisor misleads the investor then it will come back to haunt them in future. 

So from a advisors perspective, it is very important to do client expectations setting & onboard only those clients who agree with the investment approach & realistic return expectations.

5] Investment Philosophy & Process:

This is very important. 

  • Does your stock investment advisor has a sound investment philosophy & approach? 
  • Are they SEBI registered investment advisor doing in depth research before recommending stocks to you? 
  • Do they SEBI registered investment advisor do industry analysis, competition check, valuation check, study all the risk factors to the stock? 

Check the investment process of your SEBI registered investment advisor, ask for research reports before onboarding with an advisor. It is very dangerous to invest on the basis of SMS tips or one pager emails. As they say, if the process is correct, the result will follow. If the investment advisor does not have a sound basis for the recommendations, watch out ! 

6] Allocations:

Be clear in your mind, whether you want to subscribe for a stock recommendation service or stock investment advisory services. 

A SEBI registered stock recommendations service will keep on giving new stock ideas every month. You have to build a portfolio on your own  by using the recommendations given by the advisor. There is no help from the advisor when it comes to construction of the portfolio. 

A SEBI registered stock investment advisory service will provide you indicative allocations & help in building, tracking the portfolio. 

There is nothing bad if you opt for any service here. It completely depends on what kind of investor you are. 

If you do your own research, portfolio allocation, then you can opt for the stock recommendation service & use it as a source to generate ideas. 

But if you don’t have the time, expertise, and experience to build the portfolio, opting for a portfolio advisory may not be a bad idea.

7] Only Small Cap Stocks, Penny Stock Recommendations? Be Alert:

A good SEBI registered investment advisor knows the importance of liquidity while recommending stocks to clients. It is very easy to buy a stock, but selling can be very difficult if it’s an illiquid stock. 

Small caps or penny stock investing can be very rewarding if done at an individual level. But having them in advisory can be a recipe for disaster. When multiple people try to exit a low volume stock, the wealth destruction can be huge. Watch out on what kind of stocks the advisor is recommending to you. If too many small caps or penny stocks are being pushed, beware. 

In Indian context – penny stock or small cap investing can be equated to ‘Abhimanyu Investing’.

Entry is easy, but exit is very difficult. An experienced stock investment advisor will ask you to control allocations in small caps. 

8] Investor Friendliness, Hand Holding During Bad Times:

Good or bad markets, a responsible SEBI registered investment advisor always makes a point to communicate with the clients. A good investment advisor interacts more with the clients during bad times. 

In good times, the returns speak for itself. But in bad times, the adviser must speak to ensure clients are not panicking and taking incorrect decisions. An experienced stock investment advisor knows how to deal with investor behavior during bad times.  

If the advisor is not willing to disclose contact details, not willing to meet clients, or unwilling to answer client questions – investors must have extra caution unless you have a strong reference. 

Do check if the stock advisor or stock advisory company that you are planning to enroll with, meets their clients. A simple telephonic conversation or a visit to their office can give you an idea about the quality of investment advisor.

9] Alerts & Exits:

Watch out if your SEBI registered stock investment advisor is providing you result updates, when to exit stocks etc. Entering the stocks is easy. It’s the exit that makes or breaks your investment decision.

SEBI’s Directive to the Stock Market Investors:

In the interest of investor community, SEBI insists investors to deal with registered investment advisors only. 

Money is a very sensitive & important topic for most of us. Growing our investments is the key, but not losing out on the hard-earned money is equally important. 

Incorrect advice can put investors in an irreversible situation. It is very important since many dubious entities operate under the garb of investment advisors. Some entities that are involved in pushing small cap or penny stock recommendation run pump & dump operation. i.e. Pump up the share prices of small companies. It is easy to do so because of low volumes. And when excitement or buzz is at its peak, the shares are dumped on retail investors causing heavy losses.

Who Are SEBI Registered Investment Advisors (SEBI RIA) ?

Anyone giving advice or recommendations for financial instruments including direct equities, stock market, IPO’s, mutual funds, insurance products, structured derivative products, bond & money market products must get registered with SEBI as per the norms.

SEBI registered investment advisors can charge their clients. They are not supposed to receive any commission from other financial services providers i.e. mutual funds, insurance companies etc. And if the advisor is receiving any commission, they must provide adequate disclosure to the client. Always ask your advisor, whether they receive any commission or brokerage while selling you any third-party product. 

Also, in the case of stock advisory services, the advisor is not supposed to receive any compensation from the company whose shares are being recommended to the clients.

What Are SEBI Registered Investment Advisor (IA) Regulations?

SEBI’s registered investment advisor regulation is pretty exhaustive, but here are some key pointers.

  1. Advisor must have minimum educational qualifications & experience in the financial markets.
  2. Advisor must meet the minimum net worth criteria.  
  3. Advisor must do risk profiling, maintain advice & KYC records of all clients.
  4. Advisor must charge fees that are fair & transparent. 
  5. Advisor must disclose all conflicts of interest, whether they own the stock or financial product they are selling, whether they are receiving any commission etc. 
  6. Advisor must not enter contrary transactions on the advice which is being rendered to the clients. i.e. If an advisor is recommending buying shares of a company, they can not enter into sell transaction at the time of giving the advice. 
  7. Advisor must go through annual compliance audit from company secretary or chartered accountant.

How Is a SEBI Registered Investment Advisor Different From Agents or Distributors ?

1] Transparency:

Agents or distributors of mutual funds get their commissions by selling financial products. They are incentivized to push for products from where they receive the maximum commission. In the process, investors goal & interests are sidetracked. The model is such that, distributors or agents will always look to maximize their own gains. 

Fees based SEBI registered investment advisor analyses your needs, age, risk profile & understands your goals. Since he is getting paid from the client, and not from a bank or financial services firm, he will ensure the suitability of products that are being suggested. 

2] Accountability:

Agents are responsible for meeting quarterly or annual revenue targets for most financial products, and they represent the seller of the financial product. 

While fees based advisor is interested only in your fees, hence it allows them to focus on your needs to provide unbiased advice. 

3] Qualification & Experience:

Every SEBI registered advisor goes through a rigorous screening process. And they must have minimum qualification & experience to start advising on your financial matters. Distributors or agents do not have any such regulations. And they may not understand your financial priorities fully. 

4] Compliance:

SEBI registered investment advisors must keep records of all clients, fees charged, advice which is being given, and why such advice was issued to the clients. It ensures responsible behavior from the advisors end.

Is SEBI Registration Mandatory for Investment Advisors ?

Yes – SEBI registration is mandatory for all investment advisors. Any activity without prior approval or license is deemed illegal. You should always check if the advisor is registered or not on the Investment Advisors list of SEBI

Can Sebi Registered Investment Advisor Guarantee Returns ?

No – the moment you see the word ‘guaranteed returns’, ‘sure shot returns’, ‘jackpot calls’, just runaway.

Alpha Invesco – SEBI Registered Investment Advisors:

Alpha Invesco is a sebi registered investment advisory firm. We are based in Pune & the firm is operating since 2009. The firm is headed by our CIO, Chetan Phalke. CIO is supported by a team of capable research team & a strong operations team. 

Alpha Invesco is specialized in equity investments or direct stock investments in the Indian markets. Over the years, the firm has established a name for itself with its long term track record & in depth research. Today Alpha Invesco serves more than 3000 clients across India.

Alpha Invesco – Investment Approach:

“Don’t Be Scared Of Temporary Underperformance If You Have To Outperform Over The Long Term.”

Uncertainty Vs Risk Framework:

Biggest opportunities come during the times of uncertainty. Entire street is focused on next 4 to 12 quarters. We have a time horizon bigger than that, which leads to an edge & we can embrace uncertainty for a much bigger gain. 

We look for a business where underlying economics is improving & things are looking up with certain symptoms of change. We prefer pockets where valuations reflect the point of maximum pessimism, either due to near term uncertainties, balance sheet concerns, external factors or other concerns which prove to be immaterial over a period of time. 

We like stocks where there is large undervaluation and the business already has a substantial revenue base along with leadership position in their respective segment. It pays to buy such companies when they are facing temporary problems & are available cheap. These companies can improve profitability by correcting their cost structures & leveraging existing capabilities. Such businesses, if operating in potentially large profit pool sectors, can have sustainable & predictable profit growth over a period of time.

Investment Approach - SEBI Registered Investment Advisor

Know more about the investment services of Alpha Invesco – SEBI registered investment advisor

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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