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Today in the world of financial exuberance and with the market being flooded with host of investment products, what many investors want is, to be in safe hands and a prudent advice to put personal finances in place. Some players in the financial services industry while offering third party investment products, have unfortunately resorted to the practice of pushing products rather than "advising" (taking into account their client needs and risk profiling) them, which has led to several cases of mis-selling and investors feeling betrayed. In case of mutual funds too, with a plethora of mutual fund schemes to invest in, many investors haven't been advised schemes appropriately (taking into account their investment objective, risk profile and investment horizon) infusing in them a feeling being duped, while many distributors have made hay - earned good commissions. The immoral act carried by many distributors has impacted the trustworthiness of mutual fund house . So have india's mutual funds failed you?

But now to correct this anomaly and crack the whip, the capital market regulator- Securities and Exchange Board of India (SEBI) has recently (on January 21, 2013) issued the much awaited regulations for investment advisors (vide a notification in the Gazette of India).

The Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 has enunciated requirements related to obtaining a certificate of registration, qualification, capital adequacy, period of validity of the certificate, and has also mentioned other general obligations and responsibilities on the part of investment advisors.

a. A professional qualification or a post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognised by the central government or any state government or a recognised foreign university or institution or association; or

b. At least a graduate degree in any discipline with an experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.

Besides the aforesaid, the regulator has also made it mandatory for the investment advisor to have a certification on financial  planning / funds / assets / portfolio management / investment advisory services either from the National Institute of Securities Markets (NISM) or from any other organization or institution including Financial Planning Standards Board India or any recognized stock exchange in India provided that such certification is accredited by NISM. It is noteworthy that certifications will be required to be complied not only by the investment advisor himself, but also by the partners of an investment advisor and / or representative of an investment advisor, within two years from the date of commencement of such regulations and the certification would be required to be renewed before the expiry to ensure continuity in compliance.