Regulation of advisers
In this chapter: SEBI IA Regulations 2013 · Conflicts of interest, fee structures
SEBI IA Regulations 2013 require Investment Advisers to register with SEBI, comply with educational and certification requirements (NISM 10A + 10B), maintain net-worth and indemnity insurance, follow code of conduct, and disclose conflicts. RIAs charge fees (% of AUA or fixed) — they cannot earn commissions on products they recommend. This is the Indian fiduciary standard.
Eligibility: post-graduate or professional qualification + relevant experience + NISM 10A and 10B + minimum net worth (₹50,000 for individuals/proprietary, ₹50 lakh for corporate). Registration involves application, fees, and BASL (BSE Administration & Supervision Limited) supervision. Code of Conduct requires acting in client interest, suitability, fair dealing, conflict disclosure, no commission/inducements, segregation of advisory and distribution. Fees are capped: max 2.5% of AUA per annum per family, or fixed fee (max ₹1.25 lakh per family per annum).
The 2020 amendment: an RIA family cannot have both advisory (fee-only) and distribution (commission) relationships with the same client. The household must choose one. This created "RIA-only" advisory firms vs distribution networks. The exam tests scenarios where these boundaries are violated. Also note: the corporate RIA structure (used by larger advisory firms) has separate net-worth and corporate-governance requirements.