Become a SEBI-Registered Investment Advisor- A Simple Step by Step Guide

As we delve into the new age of finance and investments, the plain landscapes are turning into uneven domains. With such a rapid evolution, individuals are seeking guides through the intricacies of markets such as Stocks, shares, Forex, etc. Also, the need for wealth management to meet the stringent regulatory standards has poised an urgent need for advisors. This is where the SEBI-registered investment advisor comes into play.

In this guide, we shall look at the various steps, requirements, insights, and necessities to navigate the process of becoming a SEBI-registered advisor. Whether you are a seasoned financial professional looking to increase your gains, or an advisor aspiring to be accredited with authority, this guide will surely be an eye-opener.

What is a SEBI-Credited Investment Advisor?

In simple words, he is a professional who is authorized and registered with the SEBI i.e. Securities and Exchange Board of India. He is able to provide financial advisory services to varied clients. The SEBI-Registered Investment Advisor has to comply with the various prerequisites put forth by SEBI. These include a code of conduct, minimum qualifications, and experience and disclosure norms.

The key aim of the SEBI-Registered Investment Advisor is to provide unbiased and custom investment advice to clients as per their financial goals, status, risk profile, and preferences. Investors usually seek trustworthy advice on financial matters and such advisors can help them with transparency and truthfulness.

Who can register as the SEBI-Investment Advisor?

SEBI is basically the regulator of the registration of Investment Advisors. This is done under the SEBI Regulations, 2013. The regulations define the advisor as a person who advises about investing in securities along with research analysis.

Any person or entity can apply for this accreditation.  There are various individuals, LLPs, Companies, partnership firms, or other entities that offer investment advice and are eligible to register. Furthermore, employees and representatives of the advisory firms can also be registered with SEBI.

Interestingly, if a person is engaged in incidental advice, the likes of bankers, CAs, or insurance agents, may not register as investment advisors. However, if a person wishes to offer investment advice as his or their primary service, he or it can register as IA with SEBI.

Major SEBI Regulations for becoming an Investment Advisor Registration SEBI

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An RIA should comply with the following regulations, put forward by SEBI:

Registration

RIAs must be officially registered with the SEBI. Additionally, they should meet qualifications and all levels of experience requirements. They should have also passed a certification examination to proceed.

Disclosure

All RIAs should disclose all of the information related to their work, investment products, portfolios, services, solutions, etc. They should also disclose financial terms and their charges.

Compliance

RIAs must, in all sense, comply with all of the SEBI regulations. This includes advertising guidelines, marketing terms, conflicts of interest, and client confidentiality.

Fiduciary Duty

RIAs have to act in the best interest of the clients as per their Fiduciary duty. They should provide unbiased and honest advice by all means, without the motive of any self-gain.

Record Keeping

RIAs have to maintain detailed records of all the clients, including interactions, transactions, data, and metrics.

Qualification

To register with SEBI, the individual should have a minimum education qualification. This includes:

• Graduate degree in finance, business administration, economics,

Or

• Professional qualifications like CFA, CA, or MBA
• They have to pass a NISM (National Institute of Securities Market) certification exam

Or

• They have to pass a certification exam from a SEBI-recognized organization

Eligibility criteria for SEBI registered trading advisor

Here are the prerequisites to be met, to be eligible for SEBI accreditation

• Age not below 21 years
• At least 5 years of relevant experience
• No prior history of any convictions or violation of securities law
• A net worth of not less than 1 lakh for individuals and not less than 25 lakh for other entities
• The person should not be a stockbroker or sub-broker. He should not be working as a depository participant

Steps to Registration

Follow these steps to commence your registration:

• Thoroughly check and then meet the qualifications and eligibility criteria
• Pass the NISM certification exam. The NISM-Series-X-B: Investment Advisor, Level 1 exam is a stepping stone towards a successful investment advisor.
• When you clear the exam, you may apply for the SEBI registration. You may do this using the Form A, uploading all documents. These include identification, qualifications, CIBIL score, net worth certificate, income tax returns, etc.
• Pay the application fee of Rs. 5000.
• Wait to get the approval from SEBI. The SEBI authorities will thoroughly check your documents and applications and may even ask for additional information if required.
• When the application is approved by SEBI, you will get registered.
• You will be issued a registration certificate.
• After this, you may start offering advisory services as a SEBI-registered Investment Advisor.

After you get your certification, make sure that you comply with all regulations given by SEBI, already detailed in this guide. Also, you should always follow ethical standards of investment advisory services for the integrity of the market.

How much fees you can charge?

SEBI has started regulating the fees to be charged from RIAs from the clients. The authority has introduced a fee mechanism that regulates the charges used by the SEBI-RIAs. The fee structure includes two scenarios. First, the SEBI-registered financial advisor can charge 2.5% of the Assets under Advice annually from one family. In the second scenario, he can charge a net amount of Rs 75,000 from one family.

Clients and RIA agreement

Such agreements are highly crucial as it help both parties clearly understand the relationship going forward. The agreements usually outline the obligations, conditions, and terms of the services being provided by RIA. The agreement also highlights the scope of service, fees, rights, and responsibilities of each party.

The agreements also include the philosophy of the Investments, the client’s goals, risk tolerance, communication pattern, and reporting frequency. Further, you may also find provisions for terminating the agreement or resolving the disputes between the parties.

How can clients find an SEBI-Registered Investment Advisor?

The easiest way is to visit the official SEBI website and then scroll through the list of registered investment advisors. You can modify your search and look for RIAs as per your needs, locations, budget, etc. Another popular way is to check financial planning organizations and seek referrals from family or friends. Don’t forget to verify the credentials before you make a decision.

Benefits of getting registered with SEBI for advisors

The SEBI certification can help investors in numerous ways, both in the short and long term. Here are the benefits that shall not be overlooked:

Professional development

It helps in presenting advisors as a professional, with all the accreditation and certification from regulatory authorities

Credibility

When you register with SEBI, your credibility as an investment advisor elevates. The registration shows that you are meeting all necessary standards set by the regulatory body.

Business expansion

SEBI registration can help you to provide a wide range of services. This includes portfolio management, financial planning, and so on. The services and solutions can attract more clients and help you in extending your business.

Legal Compliance

When you get SEBI accreditation, you are bound to follow strict guidelines and comply with the regulations. This helps clients maintain a level of trust. This also protects from using unethical practices, which can result in drastic circumstances.

Protection

SEBI looks to protect the investors. It offers a dispute resolution mechanism. This helps resolve conflicts in dire situations.

We hope you enjoyed reading our guide on the ideal method to get registered as a SEBI investment advisor. Read our Blog to explore more such interesting topics related to finance, shares, stocks, and more.

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