Opening and Running a PMS Account — Onboarding, Custody, Statements
This lesson follows a PMS account from opening to day-to-day running: the client agreement, the option to onboard directly, bringing in the minimum, custody of the securities, and the reports and audited statement the client must receive.
The agreement comes first
Opening a PMS account starts with an agreement between the client and a SEBI-registered portfolio manager. The agreement records the service the manager will provide (discretionary, non-discretionary or advisory) and the fees.
Everything that follows runs on that agreement. It sets the terms within which the manager acts, and it is where a client finds the fee, any exit load and the terms for withdrawing money.
Direct, or through a distributor
SEBI requires portfolio managers to give clients the option of being onboarded directly, without a distributor. No charges other than statutory charges are levied for onboarding this way.
A client may still come through a distributor. The distributor is then paid a trail commission out of the manager's fees; upfront commission is not permitted. Either way the result is the same kind of account: an individual one. PMS has no pooled units.
Funding the account
Unless an exemption applies, such as the one for accredited investors, the client brings in at least ₹50 lakh. It may be brought in as funds or as securities.
The securities then sit in the client's own account. From the first day their value moves with the market, and returns are not assured.
Custody: who holds the securities
SEBI's regulations require a custodian for the securities a portfolio manager manages. The custodian holds them in safekeeping while the client remains their owner.
This separates two roles. The manager decides or executes, depending on the service, but does not hold the securities in its own name. A distributor or APMI plays no part in custody. Custody keeps securities safe; it does not protect their market value.
While the account runs
The manager must send the client a report at least once a quarter, and the client receives an audited statement of the account every year. These are SEBI requirements.
Other routines are not. Review meetings, where a manager offers them, are the manager's own practice. No report, statement or meeting carries any assurance about future returns.
Rules at a glance
An account's first year
Vandana, 51, an architect in Indore, decides to open a discretionary PMS account. She is told she may onboard directly with the portfolio manager or come through a distributor, and she chooses to go direct. She signs the agreement, which records the discretionary service and the fees, and brings in ₹65 lakh.
The manager buys securities for her account, and a custodian holds them in safekeeping; Vandana is their owner. During the year she receives a report each quarter, and after the year ends she receives an audited statement of her account. Over that year the value of her portfolio has moved up and down with the market.
Key points
- The account opens with an agreement between the client and a SEBI-registered portfolio manager, which records the service and the fees.
- Managers must offer direct onboarding, without a distributor, with no charges other than statutory ones.
- Unless an exemption applies, the client brings in at least ₹50 lakh as funds or securities.
- A custodian holds the securities; the client remains the owner.
- The client receives a report at least once a quarter and an audited statement every year; review meetings are a manager's own practice.
Common misunderstandings
- A distributor is not a required step: managers must offer direct onboarding, with no charges other than statutory ones.
- The portfolio manager does not hold the client's securities in its own name: a custodian holds them and the client remains the owner.
- Review meetings are not a SEBI requirement: the required documents are a report at least once a quarter and an audited statement every year.
- Custody is not protection against losses: it keeps the securities safe, not their market value.
Questions people ask
What does direct onboarding cost?
No charges other than statutory charges are levied for onboarding directly, without a distributor.
Who holds the securities once the account is running?
A custodian, on the client's behalf. The client remains the owner; the manager, a distributor or APMI does not hold them.
What must a client receive every year?
An audited statement of the client's account, in addition to the reports sent at least once a quarter.
What this lesson relies on
- SEBI (Portfolio Managers) Regulations, 2020 (as amended to 3 September 2025)
- SEBI Master Circular for Portfolio Managers, 16 July 2025
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.