How to Become SEBI Registered Investment Advisor in India?

In India, you have to be registered with SEBI if you want to be an investment advisor. Any person except the investor who is advised is not entitled to accept any fee or remuneration from a registered investment advisor. This means that only a fee recommended for consultation can be paid to an investment advisor in India.

The SEBI Investment Advisers Law, 2013 isolates selling commissions from investment advice. This regulation was initially strongly criticized by the consultancy community in India. Later, however, investors started to seek advice from fee-only advisors. According to the rules, therefore nobody can become an investment advisor without seeking SEBI’s approval.

But how to become a registered investment advisor? Follow this guide to know everything. 

What Does It Mean to Be a Registered Investment Advisor?

Wondering how to become a RIA? Learn about their job role first. Investment advisors are specialists who provide clients with advice and assistance in areas related to financial matters. Investment advisors provide advice on all monetary topics, such as insurance plans for financial planning or investment strategies. One has to obtain a certificate of registration from SEBI to pursue a career as an investment advisor in India.

The following is a list of the documents that must be submitted along with the request:

• Address proof
• Evidence of Identification
• Qualification proof, including degrees.
• Certificate provided by CA that declares net assets
• Income Tax Return for the previous three years

Also read What is a Sub-broker?

Eligibility Criteria for Becoming a SEBI Registered Investment Advisor

One of the key steps in how to become a SEBI Registered Investment Advisor is meeting the eligibility criteria set by SEBI. The SEBI RIA eligibility criteria include educational qualifications, relevant experience, certifications, and financial standards.

1. Educational Qualifications

Candidates need to be at least postgraduates and/or postgraduate diploma holders in areas such as finance, economics, commerce, accountancy, business management, capital markets, banking, and insurance. Professional qualifications such as CFA, CA, CS or ICWA are also considered.

2. Experience Requirement

The ideal candidates will have at least two years’ relevant experience in financial advisory or similar services. Firms or companies must have a minimum of five years of investment advisory, securities, or portfolio management experience.

3. Certification Requirement

The investment advisor certification requirements include clearing the NISM Investment Advisor Level 1 and 2 exams. Such certifications are required to be renewed at least once every three years to retain their validity.

4. Net Worth Requirement

Individual advisors must have a net worth of at least ₹5 lakh, while firms must maintain ₹50 lakh. A CA-certified net worth statement is required as proof.

5. Infrastructure

An office setup, proper IT systems, and record-keeping mechanisms are necessary to support advisory operations and maintain compliance.

How Do You Become a Registered Investment Advisor?

The steps to become an RIA in India are as follows:

• Visit the SEBI Intermediary Portal – Go to the website online & click on the Self-Registration option.
• Furnish The Info – Fill in the application’s complete details & click on proceed, which will take you to another payment tab. On SEBI’s portal, login credentials will be created online.
• Make the Payment – Making the payment is the next move in the registered investment advisor registration process. A choice of internet banking or debit card may be used to make payments. Click on the ‘Online’ payment mode, and then click on the ‘Proceed to pay’ button, which will lead you to the payment gateway.
• Receipt of a Confirmation Email From SEBI – Next, within 7-10 working days, the applicant will receive a confirmation email from SEBI for the payment of fees along with receipt of login credentials.
• Log in And Fill In The Application – Use the credentials to log in to the account & complete the details of the application. It is necessary to connect all the documentation & declarations to an application. In addition, ensure that the application is submitted within 14 days after the login credentials have been issued.
• Fill out Form A – Next, you need to log in with credentials to the SEBI portal & click on the Investment Advisor option. In the drop-down menu, select the Navigate to registration option. This opens the registration Form-A, which has different parts that an applicant must fill out and complete.
• Sebi Responds – Contact is obtained within one month of completing the RIA license application procedure. In the case of any SEBI question, the answer must be made within the allotted time.
• Grant of a Registration Certificate – The receipt of an email from SEBI for the grant of a registration number by post and a registration certificate is received by post at the registered address specified in the application.

Benefits of Becoming a SEBI RIA

Becoming a SEBI-registered Investment Advisor (RIA) places you among regulated professionals who are required to act in the best interest of clients. This regulatory recognition not only builds trust but also uncovers a few advantages for advisors to grow their practice in accordance with the market shift. In this aspect, some of these benefits are as follows:

• Credibility and Trust: Registering with SEBI shows adherence to regulatory standards and improves clients trust because of being associated with regulatory bodies.
• Expanded Investors Access: With SEBI approval, investment advisors can serve individuals, families, businesses, etc. Along with that, many high-net-worth individuals and entities prefer working only with RIAs for compliance and better risk management.
• Professional Growth: SEBI registration enhances reputation and opens opportunities for collaborations, partnerships and industry recognition.

Compliance Requirements for SEBI-Registered Investment Advisor

Compliance requirements are designed to protect investors, ensure transparency and create accountability in the advisory profession. Being aware of them in detail can help you build SEBI-compliant and customer-focused services:

• Educational Certification Standards: SEBI mandates that advisors are required to have a post-graduate degree in finance, economics or any other related discipline as well as NISM certifications. This is done to make sure that RIA has the technical knowledge on how to guide the clients in making financial decisions.
• Fiduciary Duty to Clients: RIA has a legal obligation to represent the best interests of clients. This involves ensuring that there are no conflicts of interest and that the advice given to the client is appropriate to their objectives and risk profile.
• Documentation and Record Maintenance: RIAs are required to enter into written contracts with clients and keep accurate records of recommendations, communications, and transactions. This offers transparency when it comes to regulatory inspections.
• Compliance Reporting and Audits: RIAs are required to undergo periodic compliance audits and submit reports to SEBI. These audits verify that processes, documentation and client interactions are aligned with regulatory norms.

Common Challenges of Becoming a SEBI RIA

The compliance-heavy framework and the expectations around transparency can be overwhelming for advisors. In this aspect, recognising the following challenges in advance can help you to prepare better and build practices that are resilient from the start:

• Client Trust and Retention: RIAs should always serve the best interests of clients in a transparent and objective manner with transparent prices and advice. However, attracting clients and maintaining their trust during market volatility is a significant challenge.
• Competition from Established Players: The investment advisory market is highly competitive, with a high market share of well-established players. Breaking into this space and establishing a clear client base can take significant time and effort for new RIAs.
• Continuous Education and Market Knowledge: SEBI requires RIAs to keep up with changing market dynamics and regulatory changes. Keeping updated about these norms is necessary, but it can be time-consuming.
• Technology and Infrastructure: Building and maintaining a robust technological infrastructure for client data management can be a major challenge for new RIAs because of limited access to required resources.

Conclusion

After receiving a registration certificate from SEBI, applicants will work as investment advisors. The advisor needs to keep updated on the new legislation to continue their career without hurdles. It is advisable to visit the official SEBI website for this reason and to find the latest news about the circulars and updated guidelines. 

Always note that those who have your best interests at heart are the best investment advisors. For the same thing, you should reach out to reputable franchises like IIFL Capital Services Limited in order to stay bullish on your future by becoming a financial advisor.