Many RIAs are now gearing up to give NISM Series XA and XB exams for investment advisors to renew their certification.
The Association of Registered Investment Advisers (ARIA) has written to the Securities and Exchange Board of India (Sebi) asking it to extend the deadline for advisers looking to renew their certification by a year. As things stand, advisers have to clear exams for renewal.
According to the investment adviser (IA) guidelines issued in July, such persons should have at all times a certification on financial planning or fund or asset or portfolio management or investment advisory services from the National Institute of Securities Markets
(NISM) or any other institution, including the Financial Planning Standards Board of India (FPSB).
said fresh certification should be obtained before the expiry of the existing one to ensure continuity in compliance. It, however, has disallowed advisers using continuing professional education (CPE) from obtaining fresh certification.
Many RIAs are now gearing up to give NISM’s Series XA and XB exams to renew their certification. Several are struggling to get the desired dates or examination centres to write the exams.
“Advisers have no option but to clear NISM’s XA and XB exams. The problem is that dates for nearby examination centres are not readily available, and advisers may have to travel to far-flung locations, which is inadvisable in a time like this. So, you may suddenly find a number of financial advisers who have not been able to get a fresh certification and, therefore, technically, are not qualified to give financial advice. We have, therefore, asked Sebi
to grant us an additional year to renew our certifications,” said Lovaii Navlakhi, founder, International Money Matters, a Sebi
registered advisory firm, and board member of ARIA.
According to experts, renewal through CPE points is a globally accepted norm. FPSB, which issues the certified financial planning (CFP) certification, for instance, allows members to renew membership each year if they earn 15 CPE points during the year. This requirement becomes due immediately from the first year of certification and needs to be completed at least one month before the renewal date. The points can be obtained by attending webinars, conferences, and writing for professional journals.
However, advisers cannot use these CPE points to renew their certification. Also, FPSB does not have a provision for candidates who have already been certified to take exams again.
“Making advisers write the exams all over again is not feasible. This will especially inconvenience senior professionals who may have acquired a professional certification several years ago. Not clearing the exam is a risk that some advisers will face — not due to incompetence, but due to the fact that they oversee the work and may not get into the nitty-gritty of calculations,” said Suresh Sadagopan, a financial planner and ARIA board member. Sebi has also mandated other requirements — such as cap on fees, number of clients, net worth criteria — that could make life difficult for individual advisers.
Tough road ahead
ARIA has requested Sebi to defer requirement to renew certification by a year
New guidelines say those involved in investment advising must have a financial planning certificate
Such certification must be renewed before expiry
RIAs have to clear NISM Series XA ad XB exams to renew their certification
There are 1,200-1,300 RIAs in the country
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.