SEBI Chairman Flags Decline in Registered Investment Advisers, Highlights Finfluencer Risks
In a significant address at the ARIA Aspire 2026 conference, Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (SEBI), raised alarms over the declining number of registered investment advisers (IAs) in India. He emphasized that this trend poses a serious threat to investor protection, especially as the country's investor base expands rapidly.
Concerns Over Declining Adviser Numbers
Pandey noted that the number of registered investment advisers has been decreasing since 2021, with only around 1,000 currently active—comprising approximately 470 individuals and 530 non-individual entities. He stated, "It is a matter of concern that the number of registered investment advisers has declined since 2021." This decline is particularly worrying given India's progress in financial inclusion, which now requires a shift toward financial empowerment through reliable advice.
Rising Influence of Unregulated Finfluencers
The SEBI chief warned that if the gap left by fewer regulated advisers is not filled, it could be exploited by unregulated financial influencers, or finfluencers. Citing SEBI's Investor Survey, he revealed that nearly 62% of prospective investors are influenced by finfluencers, who often present opinions as expertise and speculation as strategy. Pandey cautioned, "As India's investor base expands rapidly, our market needs more regulated advisers. Otherwise, the gap will be filled by unregulated voices—like finfluencers—who present opinion as expertise and speculation as strategy." Such trends can distort investor behavior and weaken market discipline.
Challenges in Investor Behavior and AI Integration
Pandey highlighted additional challenges, including many investors' preference for free recommendations over paid professional advice, reflecting an evolving cultural shift in India's investment ecosystem. He also addressed the growing role of artificial intelligence in financial advisory services. While AI can process large data volumes, support risk profiling, and offer cost-effective standardized recommendations, Pandey stressed that investment advice ultimately requires human judgment, context, and trust.
SEBI's Regulatory Roadmap and Initiatives
Outlining SEBI's approach, Pandey said the regulator aims to balance firm investor protection with simplified compliance. Key steps taken include:
- Relaxation of eligibility and documentation requirements for advisers.
- Easier transition from individual to non-individual entities.
- Simplified registration processes to make the advisory ecosystem more accessible.
Operational flexibilities have been granted, such as allowing advisers to share certified past performance data with clients and collect advance fees with consent. The operationalisation of the Past Risk and Return Verification Agency (PaRRVA) is expected to strengthen verification of performance data.
Governance and Transparency Measures
On governance, SEBI has mandated:
- Disclosure of AI tool usage in advisory processes.
- Proper recording of client consent for telephone-based services.
- Mandatory disclosure of "Most Important Terms and Conditions" in advisory agreements to enhance transparency.
Future Plans and Digital Initiatives
Looking ahead, Pandey announced that a working group has been set up to review the regulatory framework for mutual fund distributors and examine overlaps with investment advisers. A common advertisement code for intermediaries is also being developed to improve market communication consistency.
He revealed SEBI is developing a digital platform called "SEBI SETU" to provide end-to-end regulatory guidance for investment advisers, covering processes from registration to ongoing compliance. Additionally, a standardized light-touch penalty framework is being worked out to promote transparency and encourage compliance.
Call for Fiduciary Responsibility and Trust
Pandey emphasized that investment advisers must uphold their fiduciary role and foster a culture of responsible investing. He urged advisers to promote investor awareness on fraud and cyber risks while maintaining high governance and transparency standards. "Technology will continue to improve, and investor expectations will rise. Advisers who combine technology with trust and knowledge with judgment will remain highly relevant," he said.
As India's capital markets grow, Pandey concluded that sound financial advice will be crucial in helping investors participate confidently and disciplinedly in the country's growth story.
