Mumbai: In order to avoid misselling of investment products, market regulator Securities & Exchange Board of India (Sebi) chairman CB Bhave, highlighted the greater need for neutral agencies to educate investors.
“Neutral agencies like the media, regulators and other self-regulated bodies add more value...they make an effort to let investors see both the sides,” Bhave said while speaking at a seminar on investor education.
Intermediaries having an interest in the products do educate the people, Bhave said, but they can tend to overlook the flip side. He cited the example of derivative products where investors were told how much money they could make if the stock price rises, but were not told about what happens when the stock falls and how their losses increase.
Bhave also stressed the need for matching the risk profile of the investor and the risk coming with the product while selling, and said, “different classes of investors need different kinds of education...a retired person’s risk profile is different from that of a student.”
The Sebi chief also asked the agencies to target one such group of investors at a time when it comes to education and avoid having generic programmes.
“Emphasis must also be given to educating the investor in the language he understands, and hence, it would be beneficial if regional languages are also used,” he said.