No advice sans risk-profile of the client, Sebi to investment advisers

Regulator bans free trials, says no to cash deposits as fees

The Securities and Exchange Board of India’s (Sebi) circular, released on Friday, chalks out more stringent norms to be followed by the new class of intermediaries — registered investment advisers (RIAs). 

The regulator said it has discovered that RIAs were giving free advice on a trial basis, without considering the risk profile of the client. 

“Investment advice can be given after completing risk profiling of the client and ensuring suitability of the product ... Hence, IAs shall not provide free trial for any products/services to prospective clients,” the markets regulator said, with a view to protect investor interests.   

Besides risk-profiling on criteria