Mumbai: The Securities and Exchange Board of India Sebi ) has proposed to revise the investment advisers regulations that will change the way mutual fund schemes are sold by these intermediaries. The capital market regulator may ask distributors of mutual fund products to register either as an advisor or as a distributor. A distributor gets a fee from the mutual fund for selling a product , while an advisor receives a fee from the investor for giving recommendations.“The mutual fund distributors who want to shift from commission based model to fee based advisory model shall be required to register as an investment adviser," Sebi said in a discussion paper on Friday seeking public comments by November 4, 2016. “They shall be allowed to receive trail commission for the products already distributed subject to disclosures to the clients.“As per the proposals, independent financial advisors (IFAs), who do not register as Registered Investment Advisors (RIAs), will be renamed as mutual fund distributors. Those engaged in financial planning services will be required to register themselves as investment adviser. However, even if a distributor registers as an adviser, he will continue to receive trail income on his previous investments, the regulator said.“The new rules could have an bigger impact on online portals and banks,“ says Manoj Nagpal, CEO, Outlook Asia Capital.Sebi said banks wanting to offer investment advisory services will have to do through a separate subsidiary set up for the purpose or through one of the existing subsidiaries after ensuring that there is an arms-length relationship between the bank and the subsidiary .Similarly many online portals which currently offer both execution and advise through financial planning could face challenges.Globally, countries such as UK,USA,Australia and Canada are in the process of moving towards fee based investment advisory model.In India, 515 investment advisers are registered with Sebi as on September 28. The regulator has also proposed to bring brokers, portfolio managers,chartered accountants and company secretaries who give incidental advise to their clients within the ambit of the investment adviser regulations, in an attempt to bring uniform standards across all intermediaries providing advisory services.Banks, non-banking finance companies and corporates offering investment advisory services would be required to offer them only through separate subsidiary.Sebi has also proposed to define the term investment product as “all financial instruments that are regulated by any financial sector regulator in India.“