Dos & Don’ts when Investment with a Financial Advisor

Dos and Don’ts when dealing with a Financial Advisor-Investors seek out Investment Advisors for their investment decisions due to the vastness and nature of the Securities Market, or to make informed choices of investments. You will invest your money in an asset that you expect to return a profit. You must ensure that your money does not end up in the wrong hands.

It is important to be cautious and certain about the people/entities with whom you deal. It is important to understand what you should and shouldn’t do when dealing with an Investment Advisor.

This article will explain what an investment advisor is and the dos and donts when dealing with them.

What is an Investment Advisor?

According to SEBI, an Investment Advisor is anyone who provides investment advice to other people or groups of persons. This includes anyone who calls themselves or presents himself as a financial advisor.

Investment Advice refers any advice that relates to investing, buying, selling, or dealing in securities, investment products, such as futures and options, or other financial instruments. This includes advice on financial planning and investment portfolios. Advice can be given verbally, in writing, or by any other method of communication that is intended to benefit clients.

Dos don’ts when dealing with an Investment Advisor


  1. Only deal with SEBI-registered Investment advisors. Look for the SEBI registration numbers. Here is a list of all SEBI-registered Investment Advisors .
  2. Verify that the Investment Advisor holds a valid certificate of registration.
  3. Only pay advisory fees to your Investment Advisor
  4. Only pay advisory fees via banking channels and keep receipts with details.
  5. Ask for your risk profile before you accept investment advice.
  6. Demand that your Investment Advisor provides advice based solely on the risk profile you have created.
  7. Before acting on any investment advice, ask all the relevant questions to your Investment Advisor and clarify your doubts.
  8. Before making any investments, consider the investment’s risk-return profile as well as its liquidity and security aspects.
  9. Ensure that the conditions are in writing and signed. Be sure to read the terms and conditions, especially those pertaining to advisory fees, advisory plans, categories of recommendations, etc. Before dealing with an investment advisor.
  10. You should be vigilant when you are making transactions.
  11. Contact the relevant authorities to resolve your concerns/doubts.
  12. Inform SEBI of Investment Advisors who offer guaranteed or assured returns.


  1. Avoid dealing with entities that are not registered.
  2. Investment Advisor cannot trade on behalf of you. Investment Advisor shouldn’t have your login credentials.
  3. Investment Advisors should not make your transactions. You should be able to control your own transactions.
  4. Investment Advisors do not accept money from you for investments.
  5. Do not fall for promises of guaranteed returns.
  6. Do not be tempted by higher profits to abandon your trading discipline.
  7. Do not be tempted by misleading advertisements or rumors about the market.
  8. Avoid making transactions based solely on the phone or message of any Investment advisors or their representatives.
  9. Do not make decisions based on repeated calls and messages.
  10. Do not entertain any unsolicited tips or messages on WhatsApp, Telegram and other social media channels.
  11. Don’t fall for limited-time discounts, incentives, or gifts. Investment Advisors may offer incentives.
  12. Do not rush to make investments that are not in line with your investment goals and risk appetite.

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