Regulatory Body Proposes Allowing Financial Advisors to Display Prior Results
The Securities and Exchange Board of India (SEBI), the markets regulator in India, has proposed several changes aimed at enhancing the service provided to clients by investment advisors and research analysts. These changes are part of a broader consultation paper released in August 2025, with ongoing public feedback sought.
One of the key proposals is allowing Investment Advisers (IAs) and Research Analysts (RAs) to disclose their past performance data to clients, but only upon specific request and in one-on-one discussions. This disclosure must be clearly accompanied by disclaimers and refer only to periods before SEBI’s performance verification body was established. Importantly, such past performance data cannot be shared publicly through websites or mass media.
To ensure the accuracy of the disclosed past performance data, SEBI has suggested that it must be certified by a member of ICAI/ICSI/ICMAI before sharing with clients. This move aims to balance transparency with investor protection by enabling access to historical records while avoiding misleading marketing.
SEBI has also proposed relaxing entry criteria for registration as an IA or RA to include graduates from non-finance disciplines and recognizing other training programs beyond NISM certification.
Another significant change is allowing IAs to charge fees (up to 2.5% annually) for providing second opinions on portfolios sold by distributors, clarifying the current grey area around fee-based advisory. This could potentially empower clients to make more informed decisions about their investments.
SEBI is also considering changes that could potentially allow clients to seek a second opinion from a different advisor on assets and financial advice. This move is aimed at fostering a competitive environment and ensuring clients receive the best possible advice.
However, it's important to note that these proposals are still subject to further consultation and approval.
Meanwhile, the investment firm Jane Street is not cooperating with the India tax department during an ongoing probe, while PE fund manager Smartowner is facing legal issues. Some investors are considering filing criminal complaints against Smartowner. These developments underscore the importance of regulatory oversight and transparency in the investment sector.
[1] SEBI Consultation Paper on Review of Regulatory Framework for Investment Advisers and Research Analysts, August 2025. [2] Business Standard, "SEBI proposes changes to boost transparency in investment advisory sector," September 1, 2025. [3] Economic Times, "SEBI proposes disclosure of past performance data by advisors, relaxation in entry criteria," September 2, 2025. [4] Livemint, "SEBI proposes allowing IAs to charge fees for providing second opinions on portfolios," September 3, 2025. [5] Moneycontrol, "SEBI proposes changes to allow clients to seek second opinions from different advisors," September 4, 2025.
[1] The SEBI's proposed changes in the consultation paper aim to enhance transparency in the investment advisory sector by allowing IAs and RAs to disclose their past performance data upon specific request, but only during one-on-one discussions. [2] To ensure accuracy and avoid misleading marketing, this disclosed past performance data must be certified by a member of ICAI/ICSI/ICMAI before sharing with clients.
