Decoding SEBI move to make Post Graduate programme compulsory for investment advisors

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In an interesting move, markets regulator SEBI has said the Post Graduate programme in the securities market will be an eligible qualification for recognising portfolio managers, investment advisors, and research analysts related to  their qualifications.

This is seen as one of the regulator’s efforts to ensure that intermediaries in the financial markets are properly trained, and untrained players are shunted out over a period of time. The regulator has not disclosed how it proposes to deal with players without the requisite qualification but there are signs that SEBI may announce a policy on this issue as well.

“SEBI is stepping up its efforts on compliance and controls and trying to restrict entry to qualified personnel in areas like financial and investment advisory services. A significant number of people working without sufficient qualifications may have to be shunted out in the course of time,” Nasser Salim, Managing Partner , Flexi Capital LLP, an AMFI registered mutual fund distributor, told Money9.

The move has far-reaching repercussions because a significant part of investment advisors and portfolio managers happen to be people without the requisite qualifications, market sources said. There are hundreds of self-appointed intermediaries working on the strength of their contacts with major clients but do not have the necessary qualifications.

The move will help recognise “the Post Graduate programme in the securities market of not less than one year offered by NISM” as an eligible qualification for portfolio managers, investment advisors and research analysts, according to SEBI.

SEBI said portfolio managers need to have a professional qualification in finance, law, accountancy or business management from a university or an institution recognised by a recognised university or a professional qualification by completing a Post Graduate Programme in the Securities Market (Portfolio Management) from NISM.

The market regularly updates rules and procedures and intermediaries need to have updated information. This is why qualified personnel are essential for providing suitable guidance to retail investors.

On the other hand, a large number of investors may prefer to work with intermediaries they are accustomed with. “Many investors do not wish to discuss their wealth management plans with unknown professionals even if they have better qualifications. They give higher importance to the trust factor and may like to continue with those who have kept their trust,” a market source said.

The situation is evolving and the regulator may find some useful roles for intermediaries with long experience but without the necessary qualifications. SEBI may consider giving them the role of being sub-advisors working under suitably qualified advisors, portfolio managers and analysts at a later stage, Salim said.