WHO ARE SEBI RIAs (REGISTERED INVESTMENT ADVISER)?
A professional who has been authorized and registered with the Securities and Exchange Board of India (SEBI) to offer clients financial advising services is known as a SEBI-Registered Investment Advisor. A SEBI-Registered Investment Advisor is required to adhere to the code of conduct, disclosure standards, and minimal educational and professional experience criteria as specified in SEBI (Investment Advisers) Regulations, 2013
A SEBI-Registered Investment Advisor's main duty is to provide customers with unbiased and individualized investment advice based on their financial goals, risk tolerance, and investment preferences. A SEBI-Registered Investment Advisor is able to offer investors credible and transparent advice.
REGISTRATION MANDATORY FOR
Anyone who meets the criteria to be considered an investment advisor must register with SEBI.
- A person who offers investment advice or conducts research analysis is referred to as an investment advisor in the legislation.
- This includes individuals, partnership businesses, LLPs, companies, and any other type of entity that charges clients for financial advising services.
- Investment advisory business representatives and staff members who engage with clients and offer advise ought to be registered with SEBI.
- A banker, chartered accountant, or insurance professional who provides incidental advice is not obliged to register as an investment advisor.
However, if this person wants to offer investment advice as their main service, they can register as an IA with SEBI.
SEBI REGULATION (INVESTMENT ADVISERS) REGULATIONS, 2013
Registration: RIAs must register with SEBI and adhere to minimum experience and certification standards. They must also succeed on a certification examination.
Fiduciary: Duty RIAs have a fiduciary duty to behave impartially and in the best interests of their clients.
Disclosure: RIAs should be transparent about all aspects of their investing services and products, including fees.
Record-keeping: RIAs are required to keep thorough records of all customer contacts and transactions.
Compliance: RIAs are required to abide by all SEBI rules, including those pertaining to client confidentiality, conflicts of interest, and marketing and advertising
ELIGIBILITY REQUIREMENTS
The following qualifications are required for registration as an RIA.
- Five years or more of related experience.
- No prior convictions for a financial crime or a violation of securities regulations.
- Not a depository participant, stockbroker, or sub-broker, nor affiliated with one.
QUALIFICATION
- A post graduate degree in finance, economics, or business administration is the bare minimum educational need.
- or a professional credential such a CA, CFA, or MBA.
- The candidate must have completed both the NISM-Series-X-B: Investment Adviser (Level 2) certification and the NISM-Series-X-A: Investment Adviser (Level 1) Examination from the National Institute of Securities Markets (NISM).
- The individual or company must have at least five years of experience working in securities market-related roles such as fund management, research analysis, or investment advice services.
- According to SEBI regulations, individuals must have a minimum net worth of Rs. 5,00,000, while partnership firms and businesses must have a net value of Rs. 50,00,000.
HOW TO REGISTER AS AN INVESTMENT ADVISOR
The following are the steps for registering investment advisors online on the SEBI website:
- Go online and access the SEBI Intermediary Portal by selecting the Self-Registration link.
- The following information must be included in the applicant's cover letter:
- The applicant's ability to offer investment advising services prior to current regulations. If so, give more information.
- Information regarding the investment guidance given prior to such application.
- It is submitting an application to be registered as a new investment adviser offering advisory services.
- The applicant must include the following as part of the registration process:
a. Form A, which must be correctly filled out, numbered, signed, and stamped.
b. Rs. 5,000/- in application fees paid by bank draft made out to "The Securities and Exchange Board of India," payable at Mumbai.
- For the purpose of evaluating the award of registration, SEBI shall take into account all the requirements outlined in the Regulations. After verifying that the applicant complies with the requirements, SEBI will approve the application and notify the applicant. Upon receipt of the registration fee, the applicant will receive a certificate of registration, subject to any terms and limitations the Board may deem appropriate and fit.
5. Following clearance from SEBI, the applicant must pay a registration fee of Rs. 1,00,000 (if corporate) or Rs. 10,000 (if individual) via bank draft payable to "The Securities and Exchange Board of India" with a Mumbai mailing address. SEBI shall issue the applicant the certificate of registration as an IA upon receipt of the registration/reregistration costs.
Post registration, conformity
- The IA must adhere to the reporting criteria set forth by SEBI from time to time once registered.
- The IA is required to periodically examine the SEBI website for any updates, circulars, or recommendations that SEBI may occasionally issue with regard to the IA.
- Within a reasonable amount of time, the IA must notify SEBI of any major changes to the information already provided to SEBI.
Grant of a Registration Certificate
The applicant receives an email from SEBI requesting the mailing of a registration certificate to the registered address specified in the application along with a registration number and will be valid [till it is suspended or cancelled by the Board.]
ROLE OF SEBI (RIAS)REGISTERED INVESTMENT ADVISORS
Following are some of the primary responsibilities of SEBI Registered Investment Advisors (RIAs), as outlined by SEBI regulation.
OFFERING FINANCIAL ADVICE
According to their clients' specific needs, such as their financial goals, risk tolerance, and investment preferences, SEBI RIAs must offer them individualized investment advice.
Educating Customers
Additionally, SEBI RIAs must inform their clients of all of the available investment options, including the risks and potential rewards. Clients of investment advisors are also assisted in understanding the complexities of investing in securities and the actions of the market.
Performing Research
In order to build the best possible investment portfolio, SEBI RIAs do research on a variety of investment options and give customers the most recent information on market trends, business advancements, and investment techniques.
Portfolio Administration
Additionally, SEBI RIAs are required to provide clients with portfolio management services. This aids customers in creating an investment strategy that is well-diversified and customized to their unique needs and objectives.
Compliance
All regulatory standards outlined in the SEBI (Investment Advisers) Regulations, 2013, must be followed by SEBI RIAs. The upkeep of customer privacy, the avoidance of any situations involving conflicts of interest, and the preservation of proper transparency in revealing all fees and charges related to their services are among these responsibilities. Additionally, RIAs must maintain accurate records for at least five years of all client communications and transactions, including suggestions and choices regarding investments.