Investment Advisor Registration with SEBI – A Complete Guide

An investment advisor is also known as a stockbroker. A stockbroker is an individual or a group that makes investment suggestions and conducts securities examination in exchange for a fee via direct management of customers’ assets or by a method of written publications, as mentioned in Investment Advisors Act, 1940. Securities and Exchange Board of India announced Investment Adviser Regulations in the year 2013 that isolate the commission from selling recommendations on investment. As per the Investment Adviser Regulations, a person should register himself first with SEBI; also, the registered person cannot receive compensation from any individual other than their customer is advised. Scroll down to check the process of Investment Advisor Registration with SEBI.

Who is an Investment Advisor?

It is also known as “Financial Advisor” and alternatively can be spelt as a financial advisor or investment advisor. The investment advisor executes their duties as professionals within the financial industry by giving guidance to the customers in exchange for fees. The interests of customers should be preferred by the investment advisors, as they owe a fiduciary duty towards them.

Registered Investment Advisor – Overview

A Registered Investment Advisor is usually an individual or a firm who advises high net-worth individuals on their investments & also manages their portfolios. The primary obligation of a registered investment advisor is to offer investment advice that acts in the best interest of their customers. The procedure of Investment Advisor Registration with SEBI should be done with the SEC (Securities and Exchange Commission) or State Securities Administrators. An incorporated investment advisor gets paid like mutual fund managers. They generally earn their revenue via a management fee which is comprised of percentage assets held for a customer. Their fees vary, but the average is around 1%.

What is the Eligibility Criteria for Investment Advisor Registration with SEBI?

A person to get Investment Advisor Registration with SEBI should have the following minimum qualifications:

1. An individual should have a PG degree, Business Management, Capital Market, Economics, Professional Qualification, Accountancy, Commerce, banking, insurance or actuary science from a university or an institution that should be known by the Central/any State Government/any Foreign University or Institution.
2. In case the investment advisor doesn’t have the minimum qualification, they should be graduated in any discipline having a minimum of five years of experience in activities concerning advice in financial products.
3. Additionally, an investment advisor must have certification or financial planning, asset, fund, or portfolio management or services of investment advisory either from NISM or from any other institution or organisation. Financial Planning Standards Board of India furnished such certification is recognised by NISM (National Institute of Securities Markets).
4. The present investment advisors looking for Investment Advisor Registration with SEBI under these regulations should ensure their representatives and partners get certification within 2 years from the commencement date of such rules and should be renewed before the lapse.
5. The investment advisors who are business or company bodies must have at least Rs. 25 lakhs of net worth.
6. The partnership or firms or individuals should have net tangible assets worth not less than Rs. 1 lakh.
7. The Registration Certificate issued as per the regulations of SEBI remains valid for five years from the issuance date.

Documents Required for Investment Advisor Registration with SEBI

Following are vital documents required at the time of Investment Advisor Registration with SEBI:

1. Identity Proof (Aadhar Card, PAN Card, Driving License, etc.);
2. Address Proof (Such as latest utility bills);
3. Submit any qualification proof such as Degree Certificates, NSIM exam Certificates of CFP Certificates;
4. In case of graduates, submit experience certificate;
5. Submit a net worth certificate from CA (Minimum net worth necessity is rupees one lakh for partnership firm or individuals;
6. CIBIL Score;
7. Net Worth Certificate from CA;
8. ITR (Income Tax Returns) for the past three years;
9. Various Declarations.

Procedure for Investment Advisor Registration with SEBI – Offline or Online Mode

1. Offline Mode:

The application form for Investment Advisory Registration with SEBI should be submitted at the Head Office of SEBI in Mumbai or at the local office or regional office, which is closest to the residence place.

The Regional Office of SEBI is located in:

• Northern Regional Office at Delhi.
• Western Regional Office-II at Ahmadabad.
• Eastern Regional Office at Kolkata.
• Southern Regional Office at Chennai.

Now, SEBI has opened nine local offices at Guwahati, Hyderabad, Patna, Jaipur, Kochi, Bengaluru, Bhubaneshwar, Lucknow, and Indore.

Following is the offline registration process with SEBI:

Step 1: The candidate for grant Investment Advisor Registration under SEBI Regulations, 2013 (Investment Advisers) should make an application to SEBI in Form A as given in the Regulations along with all vital documents.

Step 2: Usually, after application receipt for Investment Advisor Registration, the candidate will get a reply from SEBI within a month.

But, the time taken for the registration to finish depends on how the candidate satisfies all registration necessities, consisting of the information provided.

Step 3: The candidate should go via the SEBI (Investment Advisers) Regulations, 2013, to check whether they fulfil the criteria and other details which may aid in fasting the registration process.

Step 4: The candidate should state the following in the cover letter:

• If the candidate is providing investment advisory services before SEBI Regulations, 2013. If yes, they need to furnish details;
• Investment advice details which were provided prior to the application;
• This application is for the registration of new investment advisory services.

Step 5: The candidate, along with the form, have to submit the following:

• Correctly filled Form A, which should be duly signed and stamped;
• An application fee of Rs. 5000/- in the form of a bank draft made in favour of “The Securities and Exchange Board of India” payable at Mumbai.

2. Online Mode:

Step 1: Visit the official portal of SEBI^[1] and click on the “Self Registration” menu. Complete the application form by filling in all the details and then click on proceed button.

Step 2: Click on the Online Payment Mode and proceed further to make payment through a debit card or internet banking.

Step 3: Once the application is completed and making payment, the candidate will get an acknowledgement mail along with login id and password.

Step 4: A mediator login id attached with the activation link will be sent to the candidate within dew days.

Step 5: Application submission should be finished within 14 days of the mail receipt. In case of any failure to apply within 14 days, the self-registration will expire, and the application fee will not be refunded.

Issuance of Certificate after Investment Advisor Registration with SEBI

• SEBI will consider all the necessities specified in the Regulations for the purpose of issuance of the registration.
• If SEBI is pleased that the candidate satisfies all the requirements, will consent the applicant and information concerning the same, on payment receipt of registration fees, permit certificate of registration subject to the terms & conditions as the board may deem fit and appropriate.
• On the receipt of consent from SEBI, the candidate, if it is a corporate body, should pay a registration fee of Rs. 1,00,000 and Rs. 10,000 in the case of the individual.
• The registration fee should be made in favour of the Securities and Exchange Board of India (SEBI).

Conclusion

In India, we pay fees to doctors, lawyers, etc., for their advice, but somehow we are not used to paying fees to charges to Investment Advisors. This is either because we are uninformed of the indirect fee structure which we are paying till this date and thought it to be a free service or we are pleased with the recommendations given to us by our friends and family. When it comes to life savings and financial purposes, getting expert advice with fewer fees is a good decision. The investment advisors incorporated with SEBI shall know the risk profile of the investor and their investment goals before giving any investment recommendation.

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