SEBI Flags Drop in Registered Investment Advisers to 1,000 as Unregulated Finfluencers Fill the Void

Capital markets regulator Securities and Exchange Board of India (SEBI) has raised alarms over a persistent decline in the number of Registered Investment Advisers (RIAs) across the country, warning that the resultant gap is being aggressively occupied by unregulated financial influencers.

Addressing the Aspire 2026 conference organized by the Association of Registered Investment Advisers (ARIA) in Mumbai, SEBI Chairman Tuhin Kanta Pandey pointed out that the count of active RIAs has dropped from nearly 1,300 in March 2023 to around 1,000, comprising approximately 470 individuals and 530 institutional entities.

Finfluencers Filling Advisory Vacuum

SEBI highlighted that while India has achieved unprecedented scale in financial inclusion—with millions of new retail demat accounts opened over the past few years—the transition to genuine financial empowerment is being stymied by a scarcity of fee-only, fiduciary advice.

According to findings from SEBI’s latest Investor Survey, nearly 62% of prospective investors admit to being swayed by social media "finfluencers". Regulators warned that such figures frequently disguise speculation as investment strategy and promote personal opinion as professional expertise.

The SEBI chief described this trend as highly undesirable, noting that free, unverified stock tips distort investor behavior, undermine financial discipline, and expose household savings to unnecessary risks. He added that the advisory deficit is partly cultural, as Indian retail participants often remain reluctant to pay transparent advisory fees and instead seek out free tips online.

Structural Reforms Underway

To address regulatory hurdles that have historically made the registered advisory route cumbersome and commercially unviable, SEBI has initiated several structural relaxations:

• Lowering Entry Barriers: SEBI has eased stringent qualification and documentation norms, while streamlining the transition process for individual advisers looking to convert into corporate entities.
• Performance Transparency: Registered advisers now have greater leeway to share certified past performance track records on a private, one-on-one basis with clients.
• Digital Support Platform: The regulator is building SEBI SETU, an end-to-end digital assistance portal aimed at handholding prospective and existing advisers through registration, disclosures, and ongoing reporting requirements.
• Proportionate Compliance: Work is currently underway on a standardized, light-touch penalty framework designed to prevent punitive fallout for minor procedural lapses while preserving strict investor protection standards.

Promoting Responsible Investing

SEBI urged market intermediaries to embrace their fiduciary responsibilities and help educate clients on distinguishing long-term asset creation from short-term speculative trading. With digital financial fraud on the rise, the regulator also called on registered advisers to actively steer clients toward official verification mechanisms such as SEBI Check and verified UPI payment protocols to prevent unauthorized fee diversions and scam-related losses.

Tags: SEBI ARIA Wealth Management Retail Investors Indian Capital Markets