The SRO would need to register advisors, lay down and enforce regulations, as well as assume responsibility for dispute resolution.

The proposed regulatory framework will mandate the person who will interface with the customer to declare upfront whether he is a financial advisor or an agent of the manufacturer. Distributors will be barred from advisory services for a commission; instead they will have to sell for a fee.

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SEBI has said that individuals should acquire a professional qualification such as becoming a chartered accountant, a Master of Business Administration in finance or similar qualification from a recognized university in order to register with the SRO as an investment advisor. Alternatively, the person would need to have 10 years of experience.

According to the proposed rule, investment advisors would also have to maintain records including investment recommendations and transaction for at least five years.

"While the activity of giving investment advice will be regulated under the proposed framework through an SRO, issues relating to financial products other than securities shall come under the jurisdiction of the respective sectoral regulators such as action for mis-selling, violation of code of conduct, conflict of interest etc," SEBI said.

For institutional bodies such as banks which wish to act as investment advisors, the requirement includes a need to maintain a minimum net worth over and above any net worth required for any of its other activities.

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Additionally, entities should have at least two key personnel having the relevant experience and necessary certification for the activity.

Several players including Morgan Stanley, Citigroup, Barclays, Religare Macquarie, JM Financial, Kotak Wealth and IIFL are in the wealth management space in India, offering a slew of products to wealthy investors.