tag:blogger.com,1999:blog-19649274.post647295992940658504..comments2024-03-27T17:16:12.789+05:30Comments on The Leap Blog: SEBI's proposals on advisors and distributorsAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-19649274.post-51244334862969656292016-11-23T00:53:19.243+05:302016-11-23T00:53:19.243+05:30The SEBI proposal appears to based on the assumpti...The SEBI proposal appears to based on the assumption that once the distributor gets a certificate of "advisor", he will stop misselling. In other words, prevalent misselling was on account of less knowledge of the distributor rather than an attempt to make gains out of high upfront premium.<br /><br />It is quite possible that knowledge enhanchment (and getting certificate) of the distributor will increase misselling as they would be now more intelligent in seeking fee benifits.<br /><br />The assumption that a knowledgeble advisor will maximize the utility function of investor at the cost of its own benefits is really very optimistic and ir-rational.<br /><br />The root cause of the misselling is the high up front premium on initial investments in some financial products (ulips, fixed deposit etc). Unless that is changed, one cannot assume that certification of distributors will make them think like a social planner at the cost of their own money making oppurtunity. Anonymousnoreply@blogger.com