Dos and Don’ts while dealing with an Investment Advisor

5 mins read
by Angel One

Due to the nature and vastness of the securities market or to make an informed choice of investments or for any other reason, investors seek the help of Investment Advisors to make their investment decisions. As an investor, you will be investing your money expecting returns from the asset you are investing in. It is important to be sure that your money doesn’t get into the wrong hands or be misused. Therefore, it is essential to be certain and cautious of the persons/entities you are dealing with. Thus, it is a must for you to know what should be and shouldn’t be done while dealing with an Investment Advisor.

Let us learn who is an investment advisor and what are the dos and don’ts while dealing with one in this article.

Who is an Investment Advisor (IA)?

As per SEBI, a registered Investment Advisor is any person who is engaged in the business of providing investment advice to clients, or other persons or group of persons, and includes any person who holds out himself as an investment advisor or is called by any other name.

Investment Advice refers to any advice relating to investing, purchasing, selling or otherwise dealing in securities or investment products such as equities, futures, and options. It covers advice on investment portfolios and financial planning. The advice can be in written, oral, or through any other means of communication intended to benefit the client.

Note that Investment Advisors are supposed to obtain registration from SEBI and follow the Code of Conduct under SEBI (Investment Advisers) Regulations, 2013.

Frequent malpractices connected to Investment Advisors

SEBI has identified the following malpractices in connection with the activities of registered and unregistered entities acting as Investment Advisors:

  1. Offering assured returns to the clients

  2. Charging exorbitant fees with a false promise of handsome returns.

  3. Mis-selling without considering the risk profile of the clients.

  4. Offering higher-risk products with false promises.

  5. Trading on behalf of the clients.

  6. Automatically upgrading or changing the service to higher-risk products that do not match with the client profile and without the consent of the client.

  7. Refund related issues and others

Therefore, you need to be aware and guard yourself against the above-mentioned practices present in the market and proceed with caution. Hence, it is a must for you to know the dos and don’ts while dealing with investment advisors.

Dos and Don’ts while dealing with an Investment Advisor


  1. Deal with only SEBI registered Investment advisors. Check for the SEBI registration number. Find the list of all SEBI registered Investment Advisors here.

  2. Ensure that the Investment Advisor has a valid registration certificate.

  3. Pay only advisory fees to your Investment Advisor

  4. Pay advisory fees through banking channels only and maintain duly signed receipts mentioning the details of your payments.

  5. Always ask for your risk profiling before accepting investment advice.

  6. Insist that Investment Advisor provide advisory strictly based on your risk profiling.

  7. Ask all relevant questions and clear your doubts with your Investment Advisor before acting on any advice.

  8. Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making investments.

  9. Insist on getting the terms and conditions in writing, duly signed and stamped. Read these terms and conditions carefully, particularly regarding advisory fees, advisory plans, category of recommendations, etc. before dealing with an Investment advisor.

  10. Be vigilant in your transactions.

  11. Approach the appropriate authorities for redressal of your doubts/ grievances.

  12. Inform SEBI about Investment Advisors offering assured or guaranteed returns.


  1. Do not deal with unregistered entities.

  2. Don’t let Investment Advisor trade on your behalf. Don’t share your login credentials with Investment Advisor.

  3. Don’t let Investment Advisor make transactions on your behalf. You should have complete control over your transactions.

  4. Do not give your money for investment to the Investment Advisor.

  5. Don’t fall for the promise of assured returns.

  6. Don’t deviate from trade discipline enticed by higher gains.

  7. Don’t get carried away by luring advertisements or market rumors.

  8. Avoid doing transactions only based on phone calls or messages from any Investment advisor or its representatives.

  9. Don’t take decisions just because of repeated messages and calls.

  10. Don’t entertain alluring unsolicited messages and tips on WhatsApp, Telegram, and other social media channels.

  11. Do not fall prey to limited period discounts or other incentives, gifts, etc. offered by Investment Advisors.

  12. Don’t rush into making investments that do not match your risk-taking appetite and investment goals.

As an investor, it’s your responsibility to safeguard your money from swindlers in the securities market. We suggest you cross-check the authenticity of any entity/person you are dealing with by checking for their registration with SEBI. Make sure you are putting your money in the right place by taking the necessary precautions.

Be updated about market happenings and new market regulations and changes in place. You can check Angel One’s Announcements section to keep yourself updated on the security market news that you must know.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on Investment or recommend buying and selling any stock.