The SEBI Registered Investment Adviser glossary

An investment adviser is a person engaged in the business of advising others on investing in securities, for consideration. Under the SEBI (Investment Advisers) Regulations, 2013, doing this without registration is prohibited.

The defining features are that the adviser is paid by the client, owes the client a duty of suitability, and must keep advice separate from any distribution business.

Investment advice means advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolios — including financial planning.

The definition is deliberately wide. What takes an activity outside it is not the format but the absence of consideration and the absence of a client relationship: advice given through mass media or purely incidental to another profession is treated differently.

A Registered Investment Adviser holds a registration number in the format INA followed by nine digits, which must be displayed on every communication along with the SEBI office address and the BASL membership number.

Registration brings substantive obligations: risk profiling, suitability, fee caps, segregation of advice from distribution, annual audit and grievance redressal. The number is the first thing to verify before paying anyone for advice.

An individual investment adviser is a natural person registered in their own name. A non-individual adviser is a company, LLP or partnership, and must appoint a principal officer and a compliance officer.

The distinction matters for distribution: an individual IA cannot offer distribution services at all, whereas a non-individual may, provided it maintains client-level segregation between the two activities.

An individual investment adviser must apply for registration as a non-individual once the number of clients exceeds 300, or annual fee income from advisory exceeds three crore rupees, in a financial year.

The threshold exists because a practice of that size needs institutional compliance — a principal officer, a compliance officer and a corporate structure — rather than resting on one person.

The 2024 amendments introduced a part-time category, letting a person carrying on another activity register as an investment adviser without giving it up — subject to the other activity not creating a conflict, a cap on the number of clients, and clear disclosure of the part-time status to every client.

It was designed to bring into the regulated fold advisers who could not previously justify full-time registration.

Certain persons are exempt from registration: those giving advice incidental to another profession such as law or accountancy, advice given only to family, mutual fund distributors advising incidentally on the funds they distribute, and advice given exclusively through public media without any client relationship.

The exemptions are narrow. Charging separately for advice, or tailoring it to an individual’s circumstances, generally takes an activity outside them.

An investment adviser is paid by the client and must recommend what suits the client. A distributor is paid a commission by the product manufacturer and need only ensure the product is appropriate.

SEBI keeps the two apart deliberately, because being paid by both sides makes genuinely independent advice impossible. The client should always know which relationship they are in.

An investment adviser knows the client, profiles their risk and gives advice suited to their circumstances. A research analyst publishes a view on a security to whoever subscribes, without assessing whether it suits any of them.

The two are registered under different regulations. If someone is telling you what you personally should buy given your situation, that is advice and needs an IA registration.

The SEBI (Investment Advisers) Regulations, 2013 created the registration regime for investment advisers and set the conduct, fee and compliance framework.

The 2020 amendments introduced fee caps, mandatory agreements and segregation of advice from distribution. The 2024 amendments relaxed entry barriers — replacing net worth with a deposit, lowering qualification requirements and permitting part-time registration — while tightening client-facing disclosure.

An applicant submits Form A through the SEBI intermediary portal, with proof of qualification, valid NISM certification, the prescribed deposit, adequate infrastructure and a clean disciplinary record.

Applications are processed through the administration and supervisory body, and registration is granted as an individual, non-individual or part-time adviser. It remains valid until surrendered or cancelled, subject to ongoing compliance.

Since the 2024 amendments the minimum qualification is a graduate degree in finance, accountancy, business management, commerce, economics, capital markets, banking, insurance or actuarial science — relaxed from the earlier post-graduate requirement.

The separate requirement of prior experience in financial services was removed at the same time, on the view that certification and ongoing supervision serve the purpose better than a time-served test.

Investment advisers must hold the NISM Series X-A (Level 1) and Series X-B (Level 2) certifications, or an accepted equivalent professional qualification.

Certification must be kept current — a fresh certificate has to be obtained before the existing one expires, and lapsed certification is a compliance breach rather than a mere administrative gap.

The 2024 amendments replaced the net worth requirement with a deposit maintained with a scheduled bank and marked with a lien in favour of the administration and supervisory body. The amount is graded by the number of clients served, so a small practice posts far less than a large one.

The deposit is available towards meeting client claims arising out of arbitration or an order, which is a more direct protection than a balance-sheet test ever was.

A non-individual investment adviser must designate a principal officer — a managing director, whole-time director or equivalent — who is responsible for the overall advisory function and must personally meet the qualification and certification requirements.

Regulatory correspondence and accountability run through this person.

Anyone in the adviser’s organisation who gives investment advice or deals with clients in relation to it is a person associated with investment advice, and must hold the prescribed qualification and NISM certification in their own right.

The rule stops a single certified principal from fronting a sales team with no qualifications behind them.

Non-individual advisers must appoint a compliance officer to monitor adherence to the regulations, circulars and internal policies, and to report breaches to the board and to SEBI.

The role covers the advertisement code, record-keeping, the annual audit and grievance handling.

SEBI permits exactly two fee modes: a percentage of assets under advice, or a fixed fee. Only one mode may be applied to a given client at a time, and switching between modes requires a cooling-off period.

Any other basis — profit sharing, performance fees, or commissions from product manufacturers on advised assets — is prohibited.

Under the assets under advice mode, fees may not exceed 2.5 percent of AUA per annum per family of client, across all services.

AUA means the aggregate net asset value of the securities and investment products on which the adviser is actually advising. The adviser must be able to demonstrate the AUD at the time of charging, with supporting evidence.

Under the fixed fee mode the adviser charges a flat amount, subject to a ceiling per annum per family of client — revised to 1,51,000 rupees by the 2024 amendments.

The ceiling covers all advisory services provided to that family, so it cannot be sidestepped by billing separate plans, reviews or reports on top.

The fee ceilings apply per family of client, defined as the individual, their spouse, dependent children and dependent parents.

Aggregating at the family level prevents the ceiling being multiplied by opening separate engagements for each member of one household.

An adviser may charge fees in advance only for the period allowed under the regulations, and only if the client agrees. The permitted period has been revised over time, so the current limit should be confirmed against the prevailing circular.

The restriction protects clients from paying years ahead for a service they may want to discontinue.

If the agreement is terminated, the adviser must refund the fees relating to the unexpired period, retaining at most the breakage amount permitted under the regulations.

The refund terms must be set out in the advisory agreement and repeated in the most important terms and conditions given to the client.

The centralised fee collection mechanism lets clients pay advisory fees through a designated platform administered under the supervisory body, rather than directly into an adviser’s account.

Because only registered advisers can receive money through it, payment through the mechanism is itself confirmation that the recipient is registered — which is its main value to a client.

No advice may be given before a written advisory agreement is executed. It must cover the terms prescribed by SEBI: the services, the fee mode and amount, the risk profiling process, conflicts of interest, liability, termination and grievance redressal.

The agreement is the client’s primary protection, and its absence is one of the most common findings in inspections.

SEBI requires advisers to provide a standardised Most Important Terms and Conditions document alongside the agreement, summarising in plain language what the client is signing up for: services, fees, refund terms, the absence of guaranteed returns and how to complain.

Client acknowledgement of the MITC must be obtained and retained. It exists because full agreements are long and rarely read.

Risk profiling assesses the client’s age, investment objectives, income, financial position, existing investments, liabilities and both capacity for and attitude to loss.

The methodology must be documented and validated, the result must be communicated to the client and accepted in writing, and the profile must be reviewed at least once a year. Advice given without a current risk profile is a breach.

Suitability requires that all advice be consistent with the client’s risk profile, objectives and circumstances, and that the adviser has a reasonable basis for believing so.

The adviser must be able to demonstrate this afterwards, with records showing the rationale for each recommendation. Suitability, not performance, is the standard against which advice is judged.

Advisers must complete KYC for every client and upload the records to a KYC Registration Agency, in the same way as any other securities market intermediary.

It sits alongside risk profiling rather than replacing it: KYC establishes who the client is, risk profiling establishes what advice is appropriate for them.

Risk profiles must be reviewed at least annually, and advice must be revisited when the client’s circumstances change materially.

A profile completed at onboarding and never revisited does not satisfy the requirement, however good the original advice was.

Advisers commonly maintain model portfolios for defined risk buckets and map clients to them. This is permitted, but it does not displace the suitability obligation.

The adviser must still satisfy itself that the model fits the individual client, and must disclose the basis of construction, the rebalancing approach and how performance is reported.

An adviser may provide implementation or execution services in direct plans of the products it advises on, through the client’s own account.

No separate consideration may be charged, and no commission or referral fee may be earned. The client is always free to implement elsewhere, and cannot be compelled to use the adviser’s route.

Advisers must maintain records of KYC, risk profiling, the rationale for each piece of advice, the advisory agreement, fee particulars and client communications, for at least five years.

Where a dispute is under arbitration or litigation, records must be kept until it is resolved. These records are what an inspection or an audit works from, and their absence is treated as though the underlying process never happened.

An investment adviser cannot both advise and distribute to the same client. An individual adviser may not provide distribution services at all; a non-individual adviser may run both activities only through separately identified divisions with client-level segregation.

The rule addresses the core conflict in Indian retail finance: an intermediary paid commission by a manufacturer cannot credibly claim to be advising the client independently.

A non-individual adviser must maintain client-level segregation: any given client, and their family, is served either by the advisory arm or by the distribution arm.

The client must be informed of the choice, and a switch between the two is subject to a cooling-off period. Records must show which side of the wall each client sits on.

Advisers must disclose all material conflicts of interest — holdings in recommended securities, relationships with product manufacturers, group entity interests and any consideration received from third parties.

Disclosure is the minimum. Where a conflict cannot be managed, the regulations expect the adviser to avoid the activity rather than merely declare it.

The code of conduct in the IA Regulations requires advisers to act honestly and fairly in the best interests of clients, exercise due diligence, maintain confidentiality, avoid misrepresentation and place the client’s interest above their own.

It is a substantive standard, not a preamble: most enforcement actions against advisers cite the code alongside the specific rule breached.

An investment adviser must not take custody of client funds or securities. Money and holdings stay in the client’s own accounts throughout.

An adviser asking for funds to be transferred to it, or for login credentials to trade on the client’s behalf, is operating outside the framework — this pattern is the single clearest warning sign of a fraudulent scheme.

No adviser may offer or hold out any guaranteed or assured return, in any form or through any wording.

The prohibition extends to implied assurances in marketing, screenshots of selected profitable recommendations, and phrases suggesting certainty. Any claim of guaranteed returns from a securities market service should be treated as disqualifying on its face.

The advertisement code governs all promotional material. Advertisements must carry the registration details, must not promise returns, must not use exaggerated or superlative claims, and must not use client testimonials or selectively presented past performance.

Material must be approved in accordance with the supervisory body’s process before publication, and records of what was published must be retained.

BSE Administration and Supervision Limited is the Investment Adviser Administration and Supervisory Body recognised by SEBI. Every registered adviser must be a member.

BASL handles administration of registrations, membership fees, advertisement approvals, inspections and the first level of supervision, leaving SEBI to focus on policy and enforcement. Its membership number must appear on adviser communications.

Every adviser must have its compliance audited annually by a member of ICAI or ICSI, covering registration conditions, agreements, risk profiling, suitability, fees, segregation, advertisements and records.

The report, together with the adviser’s response to any adverse findings, must be submitted within the prescribed period after the financial year ends. Failure to submit is itself a reportable breach.

Advisers file periodic returns with the supervisory body covering client numbers, assets under advice, fees charged, the status of complaints and changes in key personnel.

The data feeds risk-based inspection selection, so late or inconsistent filings tend to attract attention rather than avoid it.

Advisers must prominently display the registration number, the name and address of the SEBI office, the BASL membership number, the principal officer’s contact details, the complaint escalation matrix and the standard disclaimer that registration does not guarantee performance.

Complaint data must also be published in the prescribed format, which lets a prospective client see how many grievances the adviser has received.

SEBI and the supervisory body may inspect an adviser’s records, systems and client documentation at any time, with or without notice.

Findings can lead to warnings, monetary penalties, restrictions on taking new clients, suspension or cancellation of registration, and in serious cases proceedings for refund of fees to clients.

Giving investment advice for consideration without registration is a violation of the IA Regulations, and SEBI regularly acts against operators running paid tip groups and advisory schemes.

The warning signs are consistent: guaranteed returns, pressure to pay quickly, requests to transfer funds or share trading credentials, no written agreement, and no verifiable INA registration number. Verify the number on the SEBI website before paying anyone.

Advisers must have a documented grievance redressal process, name a designated officer, and resolve complaints within the prescribed timeline.

Unresolved complaints can be escalated to SEBI’s SCORES platform, which routes them back to the adviser with a response deadline and tracks the outcome. Complaint statistics must be published on the adviser’s website every month.

The securities market online dispute resolution portal provides a common route to conciliation and, failing that, arbitration for disputes between investors and registered intermediaries.

It sits after direct complaint and SCORES escalation. An award in the investor’s favour can be enforced against the adviser, including against the deposit maintained under the registration requirements.

The investor charter for investment advisers sets out the services provided, investors’ rights and responsibilities, the do’s and don’ts of dealing with an adviser, and the timelines for each activity including complaint resolution.

Advisers must display it on their website and in their offices, and bring it to the attention of clients at onboarding.