Does the Financial Advisor Own the Client or is it the Product Manufacturer? Know it Here!

Who is an Advisor?

An Advisor can be defined as one who acquires clients, communicates with them properly and comprehends their financial condition, requirements, asset class, goes through their KYC, advises them the best products/schemes and assesses their risks.

Who is a Manufacturer?

A manufacturer completes due diligence and is responsible for coming up with quality products for the clients.

Who owns the client?

We all know that both the product manufacturers as well as the financial advisors cater to the clients in every way possible. However, the question “Who owns the client?” is a topic of much debate.

It is the financial advisor who understands the financial situation of the client, keeps track of the latest financial planning tools and techniques and acts as a guide to their clients. On the other hand, the product manufacturers help in keeping their clients up-to-date by bringing forth the latest private wealth management tools and state-of-the-art wealth management software and distributing them for the convenience of the users.

There have been numerous debates and discussions regarding the ownership of the client. Furthermore, even SEBI hasn’t come up with its mandate elucidating the role of the financial advisor and the product manufacturer/distributor, which can lead to the transformation of the investment business in India altogether.

However, in this article, you can gain insight into the same. Keep reading. How long is the client owned by the advisor?

A financial advisor is often required by an investor to handle his finances in this erratic financial market of the present because sometimes expert advice acts as a saviour. Therefore, it is quite acceptable that the ownership primarily lies with the advisors.

How does the client’s ownership lie with the manufacturer?

As soon as an investor chooses his financial instrument, it is the responsibility of the manufacturer to see to the attainment of due diligence. The manufacturer should also constantly look after whether the disclosure and the transparency of the product information are duly provided to the investors based on the possible risk exposure.

For further information on the manufacturer’s responsibilities to their clients and to know why it is so difficult to decide the owner of the client, jump into the full blog here.