In a clarification note issued to iFast Financial India, SEBI has clarified that RIAs cannot charge referral fees from their clients.
Earlier, the national distributor had asked SEBI if RIAs who are not qualified to offer services like tax planning can charge referral fees from their clients for referring them to other entity or person offering such services.
In its reply, SEBI said that RIAs can only charge fees for investment advice i.e. advice relating to investing in purchasing, selling or dealing in securities or investment products and advice on investment portfolio which could include financial planning.
Here are other key clarifications:
- RIAs who are into stock broking cannot charge brokerage on securities traded through them
- Non residential Indians (NRI) and person of Indian origin (PIO) are not required to register themselves with SEBI as RIA to offer advisory services to clients who are not based out of India
- However, if NRIs and PIOs offer their services in India, they will have to obtain RIA license
- If they opt to work with corporate RIA as sub RIA, the corporate RIA has to comply with the norms related to RIAs
- A graduate degree from foreign university does not fulfil eligibility. Post graduate degree from Indian or foreign university is a must to meet eligibility criteria
- RIAs above 50 years of age as on September 2020 do not require to meet educational criteria to become RIAs
- Course offered by the Institute of Cost Accountants of India (ICMAI) will be covered under professional qualification
- LLB or LLM (Bachelor’s in Law or Masters in Law) are not considered for RIA qualification
