Entering the financial market as a securities professional comes with a set of regulatory requirements, and one critical step is obtaining registration with the Securities and Exchange Board of India (SEBI). SEBI, the regulatory authority for the securities market in India, plays a pivotal role in maintaining a fair and transparent market. Its primary objective is to protect the interests of investors and promote the healthy growth of the securities market. Having read about the Functions of SEBI, let’s now see how to become a SEBI-registered Investment Advisor. Becoming a SEBI-registered Investment Advisor involves a comprehensive application process.
How to Become SEBI Registered?
Who is eligible? How to get SEBI registration?
- Any individual or entity that falls under the definition of an investment advisor must register with SEBI. This includes individuals, partnership firms, LLPs (Limited Liability Partnerships), companies, and any other entity that provides investment advisory services for a fee.
- Employees and representatives of investment advisory firms who interact with clients and provide advice should also be registered with SEBI.
- However, anyone engaged in incidental advice, such as a banker, chartered accountant, or insurance agent, is not required to register as an investment advisor. But, if such a person wishes to provide investment advice as a primary service, they can register with SEBI as an IA.
To be a registered RIA, one should satisfy the following criteria:
SEBI Registration Requirements
- Minimum age of 21 years
- Minimum five years of relevant experience
- No prior convictions for any economic offense or violation of securities laws
- A net worth criteria must be met, as mentioned below
| Category | Networth |
| Individual | Rs.5 lakhs |
| Non-Individual | Rs. 50 lakhs |
- Not a stockbroker or sub-broker, depository participant, or associated with one
Qualifications:
- A professional qualification in finance, law, accountancy, or business management, or a professional qualification such as a CA, CFA, or MBA is required.
- Relevant certifications such as NISM Investment Adviser (Level 1 and 2) or any other certification specified by SEBI are mandatory.
- A minimum of five years of relevant experience in activities relating to advice in financial products or funds or assets, or portfolio management is typically required.
SEBI Registration Process:
- Meet the eligibility criteria: You must have a relevant degree and work experience in the above-mentioned fields.
- Passing the NISM certification exam: The NISM-Series-X-B: Investment Adviser (Level 1 and 2) certification exam is a stepping stone towards becoming an investment advisor.
- Apply for SEBI registration: Apply to SEBI through Form A along with the necessary documents, including identification, qualifications, experience, CIBIL Score, net worth certificate, and income tax returns.
- Pay the application fee: You must pay the application fee as per your application type
| Category | Application Fee |
| Individuals and Firms | Rs. 2,000 |
| Corporate Bodies, LLP’s | Rs. 10,000 |
- Wait for SEBI approval: SEBI will review the application and may seek additional information if required. Background checks will be conducted on the applicant and key personnel associated with the advisory business. The applicant may be called for a personal interview with SEBI officials.
- Get registered: Once SEBI approves your application, you will be issued a registration certificate and can start offering advisory services.
On receipt of registration/ re-registration fees, SEBI will grant the applicant the certificate of registration as an IA.
| Category | Application Fee |
| Individuals and Firms | Rs. 10,000 |
| Corporate Bodies, LLP’s | Rs. 1,00,000 |
- Comply with regulations: You must comply with SEBI regulations and follow ethical standards while providing investment advice.
Regulations:
The regulations for SEBI-registered Investment Advisors serve two essential jobs: to keep you, the investor, safe and to make sure the market plays fair. These regulations make sure that your advisor tells you everything you need to know and doesn’t hide anything that could be risky for you. They also make sure that advisors act ethically and have the right qualifications, making sure you can trust them. They create a safe and fair place for everyone in the investment world, making sure everyone is honest and looks out for you.
- Fiduciary duty: RIAs must act in their client’s best interests and provide unbiased advice
- Disclosure: RIAs should disclose all information about their investment products and services, including charges
- Record-keeping: RIAs must maintain detailed records of all client transactions and interactions
- Compliance: RIAs must comply with all SEBI regulations, including advertising and marketing, conflicts of interest, and client confidentiality
- Fee Structure: The fee structure, as set by SEBI, that can be levied by a SEBI RIA is set at 2.5% of Assets under Advice (AUA) per annum per family or INR 75,000 per annum per family. This means RIAs have the flexibility to choose between charging a fee based on the percentage of assets they manage or advise on (up to a cap of 2.5% annually) or a fixed fee (up to a cap of INR 75,000 annually), whichever they prefer, but they cannot charge more than these limits per family per year. This regulation is designed to ensure transparency and protect the interests of investors by preventing excessive fees.
Navigating the intricate world of financial markets requires adherence to regulatory standards, and securing registration with the Securities and Exchange Board of India (SEBI) stands as a crucial milestone for securities professionals.
As we explore the application process for becoming a SEBI-registered Investment Advisor, it becomes evident that eligibility, qualifications, and compliance are key pillars. There is also an added factor of authenticity and credibility attached once you become a SEBI-registered Investment Advisor.
Stay tuned to discover more about the trading and investment world, here on Gap Up.
Suggested Read: Trustworthy Indian Telegram Channels
FAQs Regarding the SEBI Registration Process for Investment Advisors
- What if my application is rejected by SEBI?
If your application for SEBI registration is rejected, SEBI will provide reasons for the rejection. Common reasons include incomplete documentation, lack of compliance with eligibility criteria, or insufficient qualifications. You can address the identified issues and reapply, ensuring that your application aligns with SEBI’s requirements. Seeking professional guidance to rectify the deficiencies in your application can improve the chances of approval in subsequent attempts.
- How much does a SEBI-registered investment advisor earn?
SEBI-registered investment advisors must comply the fee structure as fixed by SEBI which is mentioned above. However, the exact earnings can vary depending on the advisor’s experience, reputation, and client type. SEBI set the fee at 2.5% of Assets under Advice (AUA) per annum per family or INR 75,000 per annum per family.
- What are the documents required for the SEBI registration process?
You would be required to produce a Proof of Identity, Proof of address, Proof of qualification (Degree certificates, NISM exam certificates or CFP certificate), Experience Certificate in case of graduates (e.g. Insurance agency license, MF ARN card etc.), CIBIL Score, Net worth certificate from a Chartered Accountant, Income Tax Returns for the last 3 years, Various declarations.
- What is the NISM certification?
NISM Certification, offered by the National Institute of Securities Markets (NISM), is a prestigious credential for professionals in India’s financial sector. With modules covering securities operations, mutual funds, derivatives, and more, it signifies expertise and regulatory compliance. NISM, an educational arm of SEBI, provides approximately 30 distinct certification courses, offering flexibility for candidates to schedule exams at their convenience. This qualification enhances career opportunities within the financial industry.
- How to reach out to SEBI-registered investment advisors?
You can fine the registered numbers and details of every SEBI-RIA on their website, Securities and Exchange Board of India (sebi.gov.in). Additionally you can find various telegram channels and advisories offered by them, here on GapUp. You can check also out a few Trustworthy Indian Telegram Channels.
