Most of us deal with a single person when it comes to our investments. He/she normally informs us about company fixed deposits and bonds. When we want to invest in mutual funds, we go by what the person recommends. The same applies to insurance policies as well. All we have to do is sign on the forms and write the cheque, and the rest is taken care of by the 'advisor'.

However, all this is set to change. The Securities and Exchange Board of India (Sebi) recently put out a draft proposal to segregate the role of an agent and an advisor, as there have have been numerous complaints about misselling of products by the so-called advisors.

This happens mainly because the person we call our investment advisor is typically an agent or a distributor of mutual funds or insurance products or both. Since such 'agent-advisors' don't mostly get any fee for advice, they have to earn their living from the companies whose products they sell. Naturally, this could bias their recommendations.

"As per the (Sebi) proposal, the role of an agent and advisor will be segregated. An investor will have to work with two people - an advisor and an agent. The investor will get unbiased advice but the onus of transaction will shift to the investor," says Vishal Dhawan, founder, Plan Ahead Wealth Advisors.

anima sinha
pgdm 3RD sem