RIA fee capped at 2.5% of AUA or flat Rs 1.25 lakh per annum

By Ravi Samalad |  24-09-20 | 
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About the Author
Ravi Samalad is Assistant Manager - Editoral for Morningstar.in.

Securities and Exchange Board of India, or, SEBI, has released a circular outlining the new norms applicable for Investment Advisers after taking feedback on its previous consultation papers.

Here are the key takeaways from the circular:

  • Existing clients (individual or non-individual) can either avail advisory or distribution services within the group/family of IA.
  • A new client (individual or non-individual) will be eligible to avail either advisory or distribution services within the group/family of IA at the time of onboarding.
  • The client shall have discretion to continue holding assets prior to the applicability of this segregation under the existing advisory/distribution. The client shall not be forced to liquidate/switch such existing holdings.
  • Individual clients have to be identified based on the Permanent Account Number.
  • RIAs must recommend direct plans only, wherever available.
  • RIAs have to enter into an agreement with all clients by April 1, 2021, and submit a report, confirming the same to SEBI latest by June 30, 2021.
  • AUA based fee: Capped at 2.5% of AUA per annum per client.
  • Fixed fee: Capped at Rs 1.25 lakh per annum per client.
  • Fee can be charged in advance for two quarters with client consent. Fees up to one quarter can be retained by the adviser if the client wishes to terminate the contract and the remaining shall be refunded. Fees cannot be collected in cash.
  • Existing individual RIAs above fifty years of age (as on September 30, 2020) shall not be required to comply with the qualification and experience requirements. They must hold NISM accredited certifications.
  • Individual RIA must register as non-individual RIA if clientele reaches 150 and above by April 1, 2021. They shall not onboard new clients until they obtain a non-individual RIA license.
  • RIAs have to mention details such as name, type of registration, registration number and validity, address, telephone number, contact details of the Principal Officer, corresponding SEBI regional/local office address on their website, mobile app, printed or electronic materials, know your client forms, client agreements and other correspondences with the clients.


January 1, 2021

  • Maintenance of record
  • Risk profiling and suitability for non-individual clients
  • Display of details on the website and in other communication channels

April 1, 2021

  • Client level segregation of advisory and distribution activities
  • Agreement between RIA and the client
  • Fee structure
  • Registration as non-individual RIA if clients exceed 150

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