India’s rapid development is raising incomes and enhancing people’s ability to invest. While some choose to spend, an increasing number are opting to invest. With this growing interest in investments, the need for professional investment advisors is becoming more crucial than ever.
In the fiscal year 2023-24, India’s capital markets mobilized ₹11.8 lakh crore, a 20% increase from the previous year. Corporates and infrastructure entities used various instruments, including equity, debt, AIFs, REITs, and InvITs, contributing ₹10.5 lakh crore to capital formation. This significant capital movement highlights the essential role that investment opportunities play in economic development. Advisors are key in helping individuals navigate these options, ensuring they make informed and strategic decisions.
The IPO market also witnessed remarkable growth during the same period, with 272 companies going public, up from 164 the previous year. This growth was fueled by retail investor enthusiasm, increased institutional flows, and regulatory reforms. However, as IPOs become more frequent, particularly in the SME segment, which raised ₹6,095 crore through 196 IPOs, the risk of investing in poorly performing or questionable companies rises. Here, investment advisors play an essential role in guiding investors through the euphoria, helping them identify solid opportunities and avoid potential pitfalls.
Additionally, India’s corporate bond market saw record fundraising of ₹8.6 lakh crore, with private placements remaining the preferred method. With more diverse and complex financial instruments available, investors are in greater need of professional advice to navigate this dynamic environment and maximize returns.
In a landscape filled with both opportunities and risks, investment advisors are vital to ensuring that people make sound financial decisions, especially with the ever-expanding capital markets.
Recently, SEBI released a consultation paper on the need for investment advisors. In that consultation paper, it mentioned that “In recent years, the Indian securities market has experienced significant growth, leading to an increase in domestic investors. However, the number of investment advisors (IAs) and research analysts (RAs) has not kept pace with this growth. The ratio of investment advisors per million people in India is low compared to countries like the United States. This discrepancy has resulted in a rise in unregistered entities showcasing themselves as investment advisors and RAs. To address this issue and improve investor access to qualified advice, there is a need to significantly increase the number of registered investment advisors and RAs.
To support this expansion and ensure that the regulatory environment is conducive to the evolving business of investment advisors and RAs, the regulatory framework must be updated. The goal is to simplify and reduce compliance costs while enhancing investor confidence. Recommendations from working groups on regulatory provisions and compliance requirements have been considered to create a regulatory landscape that meets these needs.”
As per FY23 data released by SEBI, India has 1332 Sebi-registered investment advisors.
This is a gap that needs to be filled. So SEBI is planning to ease the eligibility of the IA and RA.
But how do they help?
- Long-term wealth creation: Investment advisors help people to create personalized strategies for long-term wealth creation. They keep on tracking all the asset classes and giving you advice based on the requirements. They will help you find the right investments. And not just that, they will help you in retirement planning and achieving financial goals.
- Expert Guidance: Investment advisors use their knowledge to give you helpful advice based on thorough market research and financial analysis. They keep an eye on current market trends and understand complex financial products. By doing this, they can help you make smart decisions and choose the right investments for your needs. Whether it’s selecting the best stocks or understanding different investment strategies, their expertise guides you through the intricacies of investing, making it easier for you to achieve your financial goals.
And there are several other ways they will help us.
Investment advisors will help you with the market volatility. Know how they will help you in market volatility?
What are your thoughts? How many investment advisors does India need? Let us know in the comments.
Savart is a SEBI-registered investment advisor. The purpose of this content is to educate, not advise or recommend any particular security. Please remember that investments are subject to market risks. Please conduct thorough due diligence or seek professional guidance before making any investment. Do not believe in any speculations.