Family members of RIAs – spouse, brother and parents are no longer required to surrender their ARN. In its recent released regulations on RIAs, SEBI has done away with the proposal thatthe immediate relatives and family members of RIAs had to surrender their ARN.
However, clients of individuals RIAs cannot avail execution services offered by a family member having ARN. SEBI has clarified that existing clients cannot avail distribution services offered by the corporate RIAs and family members of individual RIAs and vice versa.
New clients can decide if they want advisory services from individual RIAs or execution services from family member. This holds true for corporate RIAs as well.
This essentially means the clients of RIAs can avail execution services from other individuals having ARN.
Further, individual RIAs are allowed to offer execution services to their clients; however, only in direct plans wherever applicable. This means, even if a product class doesn’t offer direct plan, RIAs will have to ensure that they do not make any money out of it.
Suresh Sadagopan of Ladder7 Financial Advisors feels that the move would help individual RIAs grow business. “Selecting a business model is a fundamental right of an individual. By doing away with the requirement of surrendering ARN of family members of RIAs, the market regulator has done the right thing. Now, individual RIAs will have an option to work like corporate RIAs to some extent.”
