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India has just about 1,324 registered investment advisors for an investor base of over five crore. What is the reason for this? Is it SEBI's rules or investors' reluctance to pay for advice?
 "Why's India short on registered investment advisors?")
Answering a query from a member in the Lok Sabha, the government on Monday said that India has just 1,324 Sebi registered investment advisors against 2.75 crore mutual fund investors and 7.38 crore demat accounts. It said the ratio of mutual fund investors and demat account holders to advisors is around 76,510:1.
The number of unique demat account holders is about 30% less than the total accounts because several investors have multiple demat and trading accounts with more than one broker. However, this does not make the ratio of investors to advisers any less startling. Sebi had come out with investment advisor regulations nearly nine years ago in 2013.
The number of demat accounts has doubled in three years from 3.6 crore at the beginning of FY20. A majority of the new additions came in the past year tempted by the bull run in the Indian stock market. Meanwhile, in the last 16 months, there has been an addition of just 32 advisors.
While it is true that many of the small investors who invest a few thousand rupees in mutual funds cannot afford an advisor, we cannot ignore the fact that current advisor numbers are inadequate even for the higher middle class and high net worth population.
With annual mutual fund SIP inflows crossing Rs 1 trillion for the first time this year, SEBI should do more to increase the advisor base so the financial future of young investors today is in stable hands.
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First Published: Dec 15 2021 | 8:15 AM IST
