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Investment Advisor Registration with SEBI: Step by Step Guide

Deepti Shikha

| Updated: Mar 11, 2020 | Category: SEBI Registration

Investment-Advisor-Registration-with-SEBI

An investment advisor also known as a stockbroker is any person or group that makes investment recommendations and conducts securities analysis in exchange for a fee through direct management of clients’ assets or by way of written publications, as explained in Investment Advisors Act, 1940. Securities and Exchange Board of India (SEBI) introduced Investment Adviser Regulations in 2013 that segregate the commission from selling advice on investment. According to this regulation to work as an investment advisor, an individual must first register himself with SEBI; also the registered person cannot receive remuneration or compensation from any person other than his/her client is advised.

What is an Investment Advisor?

The investment advisor is also known as “financial advisor” and alternatively can be spelt as “investment adviser” or financial adviser.” The Investment advisor performs their duty as professionals within the financial industry by giving guidance to the clients in exchange for fees. The clients’ interests must be preferred by the investment advisors, as they owe a fiduciary duty towards them.

What Is a Registered Investment Advisor?

A Registered Investment Advisor is basically a person or a firm who advises high net worth individuals on their investments and also manages their portfolios. The fundamental obligation of registered investment advisor is to provide investment advice that acts on the best interest of their clients’. The investment advisor registration process must be done with the Securities and Exchange Commission’s (SEC) or State Securities Administrators. A registered investment advisor gets paid like mutual fund managers. They usually earn their revenue through a management fee which is comprised of percentage assets held for a client. Their fees fluctuate, but the average is around 1%.

Eligibility for Investment Advisor Registration with SEBI

An individual to get investment advisor registration must have the following minimum qualifications:

  • The individual should have a professional qualification, post-graduate degree, postgraduate diploma in finance, business management, accountancy, commerce, capital market, economics, banking, insurance or actuarial science from a university or an institution which must be recognised by the central or any state government or any foreign university or institution.
  • In case the investment advisor does not have the minimum qualification then must be a graduate in any discipline having at least five years of experience in activities relating to advice in financial products.
  • In addition, investment advisor should have certification on financial planning, fund, asset or portfolio management or investment advisory services either from NISM or from any other organisation or institution. Financial Planning Standards Board India or any recognised stock exchange in India provided such certification is accredited by National Institute of Securities Markets (NISM).
  • The existing investment advisors seeking registration under these regulations should ensure their partners and any representatives obtain certification within a time frame of two years from the date of commencement of these regulations, and it should be renewed before the expiry.
  • The investment advisors who are corporate bodies must have a minimum net worth of Rs. 25 lakh.
  • The individuals or partnership firms should have net tangible assets worth not less than Rs. I lakh.
  • The certificate of registration granted as per SEBI regulations remains valid for a period of five years from the date of its issuance.

What are the Documents Required for Investment Advisor Registration with SEBI?

The following are the documents required for getting investment advisor registration with SEBI:

documents required investment advisor registration with SEBI
Documents required investment advisor registration with SEBI

What is the Fee Structure of Investment Advisor Registration with SEBI?

The fee structure for investment advisor registration with SEBI is mentioned below:

  • An individual or a partnership firm needs to pay an application fee of Rs. 5,000.
  • A body corporate or Limited Liability firm (LLP) must pay a fee of Rs. 25,000.
  • After receiving approval from SEBI for grant of certificate of registration, an individual or partnership firm must pay the registration fee of Rs. 10,000.
  • After getting approval from SEBI, a body corporate or limited liability partnership firm will have to pay a basic registration fee of Rs. 5 lakhs.
  • SEBI after receiving registration fee will grant investment advisor registration certificate.

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What is the Process of Investment Advisor Registration with SEBI Offline Mode?

The application form must be submitted at the SEBI Head office at Mumbai or at the regional or local office which is nearest to the place of residence.

SEBI’S Regional office is located in:

  • Eastern Regional Office at Kolkata
  •  Northern Regional Office at Delhi
  • Southern Regional Office at Chennai
  • Western Regional Office-II at Ahmedabad.
SEBI has opened nine local offices at Bengaluru, Bhubaneshwar, Guwahati, Hyderabad, Indore, Jaipur, Kochi, Lucknow and Patna.

The procedure for investment advisor registration with SEBI is as follows:

Step 1

The applicant for grant Investment Advisor registration under SEBI (Investment Advisers) Regulations, 2013 must make an application to SEBI in Form A as provided in the Regulations along with all the necessary supporting documents.

Step 2

Generally, after receipt of the application for investment advisor registration, the applicant will receive a reply from SEBI within one month.

However, the time taken for the registration process to complete depends on how the applicant fulfils all the registration requirements, including the information provided.

Step 3

The applicant must go through the SEBI (Investment Advisers) Regulations, 2013 to check whether they fulfil the eligibility criteria and such other details which may help in speeding the registration process.

Step 4

The applicant should mention the following in the cover letter:

  1. If the applicant is providing investment advisory services before SEBI (Investment Advisers) Regulations, 2013. If yes, they need to provide details.
  2. Details of the investment advice which was provided prior to the application.
  3. This application is for registration of new investment advisory services

Step 5

The applicant will along with the form submit the following:

  • Appropriately filled Form A, which must be duly signed and stamped.
  • An application fees of Rs. 5,000 in the form of a bank draft made in favour of “The Securities and Exchange Board of India”, payable at Mumbai.

What is the Process of Investment Advisor Registration with SEBI Online Mode?

The following are the steps in the application process for investment advisor registration with SEBI in online mode:

Step 1

Visit the SEBI intermediary portal of SEBI https://siportal.sebi.gov.in/intermediary/index.html and click on self Registration menu. Complete the application form by filling all the details and then click on proceed.

Step 2

Click the online payment mode and then proceed to make payment either through internet banking or debit card.

Step 3

The applicant, after completion of the application and after making payment, will receive an acknowledgement mail along with login id and password.

Step 4

An intermediary login id attached with activation link will be sent to the applicant within a few days.

Step 5

Submission of the application must be completed within 14 days of the receipt of mail. In case of failure to apply within the 14 days, the self-registration will expire, and the application fee will not be refunded.

Grant of Certificate after Investment Advisor Registration

  • SEBI shall consider all the requirements specified in the Regulations for the purpose of grant of registration.
  • If SEBI is satisfied that the applicant fulfils all the requirements will approve the applicant and information regarding the same, on receipt of payment of registration fees, grant certificate of registration subject to the terms and conditions as the board may deem fit and appropriate.
  • On receipt of approval from SEBI, the applicant, if it is a body corporate, must pay registration fee of Rs.1,00,000 and Rs. 10,000 in case of the individual.
  • The registration fee must be made in favour of The Securities and Exchange Board of India.

What is the Post-Registration Compliance for Investment Advisors?

  • After registration process is complete, the Investment Advisor must comply with the reporting requirements as specified by SEBI.
  • The investment advisor must regularly check the SEBI website for any updation or circulars or guidelines issued from SEBI.
  • In case of any material change in details already furnished with SEBI, the investment advisor needs to intimate the SEBI within a reasonable period of time.

SEBI Bans Investment Advisors from Providing Free Trial of Services

  • Effective from January 1, 2020, the Securities and Exchange Board of India (SEBI) announced new measures to enhance the conduct of registered investment advisors.
  •  As per the circular issued by SEBI, the registered investment advisors (RIAs) are banned from giving free trials of services to their customers or accepting part payments for in exchange for their services.
  • Moreover, SEBI also said that registered investment advisors can only provide advice after conducting risk profiling of clients. Registered Investment Advisors must display complaints against them on their own websites and can only accept payments through banking channels.

Contact Enterslice

Enterslice provides end to end services to its client. An applicant seeking to get investment advisor registration with SEBI may contact us to get their work done in a hassle-free manner.

Conclusion

In India, we pay fees to lawyers, doctors, etc. for their advice, but somehow we are not used to paying fees or charges to Investment Advisors. This is either because we are unaware of the indirect fee structure which we are paying till this date and thought it to be a free service or we are happy with the advice given to us by our friends and family. When it comes to lifetime savings and financial goals, getting professional investment advice with minor fees is a wise decision. The investment advisors registered with SEBI shall understand the investor’s risk profile and their investment goals before giving any investment advice.

Deepti Shikha

Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. She has enough experience in handling legal affairs of the company. In the initial days of her career, she has worked as a legal researcher and has 3+ years of experience.

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