Investment advisors cannot take power of attorney from clients: Sebi

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In a letter issued to Waterfield Advisors, a Sebi Registered Investment Advisory firm catering to high networth individuals, Sebi provided guidance rejecting the ability of investment advisors to take a Power of Attorney (PoA) from clients. Under Sebi rules, investment advisors can provide implementation services but cannot charge for them. Waterfield had asked whether a PoA can be part of such implementation services. The letter was issued on 30th March 2021 and uploaded on the Sebi website on 2nd July 2021.

In its letter to Sebi, seeking guidance, Waterfield had asked whether a PoA can be sought in order to collect information from custodians on account balances, transaction details and other information of clients or to transmit information to custodians or liaise with them. However Sebi categorically rejected the ability to take such a PoA. “An investment advisor is required to render investment advice to its client and not manage funds or securities on behalf of the client,” the Sebi guidance letter stated. “A grant of PoA is neither envisaged nor appears desirable for an investment advisor,” it subsequently added.

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