Know your customers - if they are yours!

In a piece written for this paper about a month ago, I had pointed out that risk profiling (which is now being sought to be made mandatory by the...


The mumbo jumbo of risk profiling or risk tolerance is now part of orthodoxy

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The silence of the boards

Business leaders talk piously about it. Regulators have codified it into a list of dos and don’ts. Various government departments and...


Entry loads, exit investors

The Indian stock market today is moribund. The initial public offering (IPO) market is almost dead. In the 12 months ended March 31, 2012, just nine...


Financial literacy to cover up for regulatory failure?

The main feature of most financial products is that producers and distributors gain far more than savers and investors. Ironically, the same is true...


Doing More Harm: Confused regulation of financial products

A friend of mine used to joke that in the deep south of Bengal, the Sundarbans, there are three brands you would come across: the Communist Party of...


Isn’t consumer protection the primary role of regulators’?

According to a media report, the outgoing chairman of the Insurance Regulatory and Development Authority wants Irda to have a new whole-time member...


Retail investor participation: 5-point nothing

Though the regulators have not thought of it, consumer financial protection should stand on five pillars: financial education/literacy; competent and...


The bad old ways of shortchanging the customers, continue

In many of my articles since late 2011, I have emphasised that consumers of financial services in India usually do not get a fair deal because the...


Regulations around savers, please

Life insurance products and mutual funds have overlapping features, since insurance companies mainly want to sell their products as wealth...


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Changes in Our Business Model
25th Sept 2020
Greetings from Moneylife Advisory Services
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
Debashis Basu