SEBI Registered Investment Advisor vs Research Analyst: Key Differences

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SEBI Registered Investment Advisor vs Research Analyst: Key Differences

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It is a mandatory requirement for both the SEBI Registered Investment Advisors (RIAs) as well as Research Analysts (RAs) in India to obtain registration from the Securities and Exchange Board of India (SEBI). For becoming a registered investment advisor, RIA registration is mandatory. Whereas, for becoming a research analyst, Research Analyst Registration is mandatory.

 

Both RIAs and RAs are extremely crucial for the financial markets in India. However, their roles and responsibilities differ from each other. In this blog article, we will discuss the key differences between SEBI Registered Investment Advisor and SEBI Research Analyst.

Who is a SEBI Registered Investment Advisor?

A SEBI Registered Investment Advisor is an individual who is authorized by and registered with the Securities and Exchange Board of India (SEBI) to provide financial advisory services to his clients. 

 

As of 7th July, 2024, there are 979 SEBI Registered Investment Advisors in India at present. All the RIAs in India must be in compliance with the disclosure norms, ethical code of conduct, minimum qualifications and experience requirements as necessitated by SEBI. 

 

The main responsibility of a SEBI Registered IA is to offer investment advisory services which are unbiased and personalized to the clients, based on their financial goals, risk appetite and investment choices. The job of a SEBI registered investment advisor is to provide the investors reliable and transparent advice.

Who requires Investment Advisor Registration?

The registration of Investment Advisors in India is regulated by SEBI under the SEBI (Investment Advisers) Regulations, 2013. These SEBI regulations define IA as someone who advises regarding investment in securities. 

 

Anyone who fits the description of an investment advisor is required to register with SEBI. This covers people, businesses, LLPs, partnership firms, and any other organization that charges for financial advising services. Anyone who interacts with clients and offers advice on behalf of investment advisory businesses, including employees, should register with SEBI. 

 

Nonetheless, registration as an investment advisor is not necessary for anyone providing incidental advice, including bankers, CAs, and insurance agents. However, such an individual can register with SEBI as an IA if they want to offer investment advice as their main business. To become an RIA, an individual must have a minimum net worth of Rs. 5 lakhs.

Who is a Research Analyst?

A research analyst is an individual who is engaged in preparing research reports on the securities markets and providing research recommendations/reports to his clients. Research analysts are also known as equity analysts or investment analysts. 

 

Research analysts are authorized by and registered with the Securities and Exchange Board of India (SEBI). As of 7th July, 2024, there are a total of 1332 research analysts in India.

Who requires Research Analyst Registration?

The registration of Research Analysts in India is regulated by SEBI under the SEBI (Research Analysts) Regulations, 2014 or RA Regulations. Any individual who wants to engage in preparing research reports on the securities market and wants to provide research recommendations for his clients requires Research Analyst Registration.

 

Individuals, in order to be eligible for Research Analyst Registration, must have a minimum net worth of Rs. 1 lakh. Body corporate or LLP is required to have a minimum net worth of Rs. 25 lakhs. Those who have SEBI Research Analyst registration can only offer research reports and research recommendations.

Key Difference between IRA and RA

The main difference between a research analyst and an investment advisor is that the latter can offer personalized advice but the former can’t. In order to be able to offer personalized advice, it is essential to take into account the client’s financial condition, financial goals, income sources, expenses, etc. Hence, investment advisers have a stronger bond with their clients. 

 

One of IA's deliverables is determining how much money should be invested in stocks, debt, and other financial instruments. Moreover, mutual funds, stocks, and other instruments might be recommended by IAs. Since IAs are not distributors, they lose out on the actual transaction. They are permitted to impose a flat price or a fee determined by the AUM.

 

Now, when we talk about Research Analysts, they can’t offer personalized advice to their clients and their only job is to analyze and publish their analysis. The analysis of the research analyst can be published in the form of a research report of recommendations. It is a recommendation/advice so it is ultimately the client’s call whether he wants to act on it.

 

A research analyst’s major skill is research which can be fundamental based research, quantitative research or technical research. Research analysts make money by making this research available to their clients. They cannot officer personalized individual advice as they cannot have different research for different customers. However, research analysts can create multiple products on the basis of their research such as short term vs long term recommendations and different kinds of portfolios. 

 

Both Investment Advisors and Research Analysts should undertake activities permitted to them according to the SEBI license/registration they obtain. A SEBI registered advisor isn’t expected to be precise all the time. However, research analysis done by research analysts is taken more seriously.


Become a sebi registered research analyst

Conclusion

Both Investment Advisors and Research Analysts in India are registered with the Securities and Exchange Board of India (SEBI). While the Investment Advisors can offer personalized advice to their clients, Research Analysts can only make recommendations based on their research analysis. If you’re interested in becoming a registered investment adviser or a research analyst and want to obtain RIA or IA registration from SEBI, get in touch with us for assistance.

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