M. Pattabiraman, a physics professor at IIT Madras, teaches complex theories to eager students. Beyond the classroom, he’s also a well-known personal finance figure, with nine of his financial calculators featured on the Securities and Exchange Board of India’s (Sebi) investor education site.
Also meet Vijay Malik, a doctor who practised for five years but transitioned into a successful equity research analyst and now runs a popular blog under his name and has a research analyst (RA) licence.
These stories highlight an emerging trend: professionals like professors, doctors, and engineers stepping into the role of part-time investment advisors or research analysts.
The market regulator does not allow individuals engaged in other full-time professions to obtain investment advisor (IA) or research analyst (RA) licenses. This has prevented many knowledgeable professionals from offering investment advisory/research services.
However, in a recent consultation paper, Sebi has proposed the concept of a part-time investment advisor and research analyst.
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Becoming a part-time investment advisor
The requirement to become a part-time RIA/IA would be the same as that of a full-time advisor. While all other requirements remain almost the same, there is an upper cap of 75 clients.
These qualification requirements will prevent just anybody from doling out investment advice for a fee.
Also Read: Becoming an investment advisor is about to get a lot easier
The requirements to become a part-time IA/RA are similar to those for full-time advisors. Applicants must have a relevant finance-related degree, or a postgraduate degree from NISM, or a CFA charter. Additionally, they must clear the NISM 10-A and 10-B exams.
If working in another full-time role, the applicant must get a no-objection certificate from their employer while applying for this job.
Who’s left out
The market regulator said those already working in the securities field and handling people’s money such as brokers, mutual fund distributors, PMS/AIF distributors, and real estate agents, may abstain from becoming part-time investment advisors.
If the applicant is engaged in an activity under the purview of a self-regulatory organization like the Institute of Chartered Accountants of India (ICAI) and the Insurance Regulatory and Development Authority of India (Irdai), he/she would be allowed to become an investment advisor. Hence, CAs and insurance agents would be allowed to become part-time IA/RA under the proposed regulations.
Harsh Roongta, RIA, and founder of fee-only, says those involved in the securities field should also be allowed to become an IA/RA to make it a level playing field.
Career transition
The concept of part-time advisers will make it easier for many professionals to shift careers, said Vishal Dhawan, founder of Plan Ahead Advisors.
Consider an engineer who can leverage his/her mathematical expertise to become an IA/RA. Under the current rules, the engineer cannot obtain the IA/RA license without leaving their full-time job and committing entirely to the new venture. However, if the proposed part-time IA/RA rules are finalized, the engineer could first pursue this business on a part-time basis. This approach allows them to test the waters and switch to full-time investment research or advisory.
What do present RIA/RAs think
Present RIAs have a mixed view about Sebi’s new proposal. While a professional can provide investment advisory as a part-time gig, it would become nearly impossible to manage an entire financial plan. “A part-time RIA can only provide stuff like which MF to buy, but it would be nearly impossible if he starts making financial plans for 50 clients,” said Dhawan.
Also Read: IA regulation reforms: The perils of introducing part-time advisors
Suresh Sadagopan, founder of ladder7 Wealth Advisor, on the other hand, thinks the proposals need a revisit. “Can someone who is already doing other activities or pursuing other professions or employment have the bandwidth to professionally provide investment advice too? “
As the consultation process unfolds, it’s clear that Sebi’s proposal could open doors for many professionals looking for a career change. Whether this will lead to a surge in part-time advisors or create new challenges in the industry remains to be seen.
Also Read: How Sebi’s reforms could transform India’s investment advisory landscape
