Thursday, 30th January is the last day for you to give your feedback to SEBI on fourth consultation paper on Registered Investment Advisors (RIAs). You can share your comments at sebiria@sebi.gov.in.
Earlier this month, SEBI has proposed allowing individual RIAs to offer distribution services to their clients along with fee based advisory services. This will be in line with corporate RIAs who currently offer both the services to their clients. However, individual RIAs will have to obtain a new ARN to offer this service.
Here are the other key points that you need to consider while submitting your feedback.
- Client segmentation based on their willingness to pay i.e. commission or fees
- Can charge up to 2.5% on AUA irrespective of asset class. Also, there is an option to charge flat fee of up to Rs.75,000 per annum from clients
- Increase in net worth requirement to Rs.10 lakh from the current Rs.1 Lakh for individual RIAs
- Necessarily shift to corporate structure (Rs.50 lakh networth) for RIAs having Rs.40 crore AUA or more than 150 clients within six months of achieving this scale of business
- Criteria to become RIA is having 5 years of experience, post-graduation degree in finance or relevant field or profession certification like CFP, CFA. The criteria is applicable for RIA employees too
- RIAs cannot offer both RIA and MFD services to people in the same family, i.e. RIAs cannot charge a fee for financial advice from father and offer execution services to his son even if such clients want it
- Have to recommend direct plans only to fee based clients but no clarity on products, which do not offer direct plans like AIFs
- Your family members cannot hold ARN i.e. RIAs cannot offer execution services through separate arm
