Regulatory body SEBI suggests allowing financial advisors to display their previous performance records
The Securities and Exchange Board of India (SEBI) has proposed a significant change in the investment advisory sector, aiming to provide clients with more options and information to make informed decisions.
According to SEBI, the present restrictions on advisors and analysts from advertising and providing past performance details limit their ability to serve clients effectively. The proposed change is expected to address this issue, promoting competition among investment advisors and enabling clients to compare advice from multiple advisors.
Under the new proposal, clients will be allowed to seek a second opinion from a different investment advisor on assets and financial advice. This expansion of client choice is intended to enhance the decision-making process in investment advisory services.
Moreover, the change is expected to increase transparency in investment advisory services. By allowing clients to consult multiple investment advisors for their financial needs, the market is expected to become more competitive, leading to improved services and better outcomes for clients.
In a separate development, SEBI has also proposed a change that allows investment advisors and research analysts to use units of liquid mutual funds or overnight mutual funds to satisfy mandatory deposit requirements, instead of only bank deposits. This amendment provides flexibility for IAs and RAs in complying with deposit norms while ensuring the deposit remains a lien in favor of the respective supervisory bodies (IAASB for IAs and RAASB for RAs). The compliance deadline for these changes is September 30, 2025.
These changes are part of SEBI’s broader efforts to ease regulatory compliance and modernize norms for market participants, based on industry feedback and consultations. The circular formalizing these updates was issued in early August 2025.
While there are no explicit references in the provided results specifically about disclosure of past performance by IAs and RAs, the key recent disclosure-related regulatory update involving these entities is this flexibility in deposit forms.
In summary, SEBI's proposed changes aim to provide clients with more options for investment advisory services and empower them in their decision-making process. The changes are expected to promote competition, increase transparency, and lead to a more informed investment decision for clients due to the ability to compare advice from multiple advisors. The compliance deadline for the changes regarding deposit forms is September 30, 2025.
In the context of the Securities and Exchange Board of India's (SEBI) proposed changes, investment advisors will now be able to offer more options to clients, enabling them to seek a second opinion from another advisor for their assets and financial advice, a move aimed at enhancing decision-making in investment advisory services (investment, business, finance). Furthermore, SEBI has proposed allowing investment advisors to use units of liquid mutual funds or overnight mutual funds for deposit requirements, a change intended to provide flexibility in complying with deposit norms and increase transparency (finance, investing, business).
