Steven Fernandes shares his experience of being a SEBI registered Investment Advisor.
What preparation did you do
to register with SEBI as RIA?
Since I have been in advisory and distribution both, I separated the two arms. I had to transfer all assets under my management to another entity. Apart from this I had to do make sure that all compliance documents are up to date.
Is the process of registering complex? If yes, what difficulties did you face?
Not at all. My fellow members at Financial Planning Guilds India (FPGI) guided me and shared their first-hand experience which helped me get faster approval.
What ambiguities/roadblocks did you come across in SEBIs Investment Adviser Regulations?
None in my case.
SEBI has announced 400% hike in registration fee for LLPs, firms and corporates. Do you think the increase in fee would deter IFAs to register with SEBI?
Of course it will. There are a lot of advisors who may not have the financial muscle of banks or bigger institutions and they will be now compelled to register as individuals rather than corporate.
What are the benefits of registering with SEBI as RIA?
I think it’s an indication of personal growth in the advisory profession. The compliance and due diligence instills certain discipline. A prospective client will be keener to engage with a SEBI registered RIA knowing fully well that an RIA brings more transparency and stands for unbiased advice.
What are your views on the cost of compliance with SEBI's RIA rules?
Yes, the cost of compliance will go up but it has its own benefits. One may have to increase fees to a reasonable level or try and get more clients to make the practice viable. But overall I think it’s manageable.
Only 156 have registered as RIAs so far. What are the reasons for a majority of IFAs to not register with SEBI?
I think the compliance factor is deterring a lot of them.
SEBI's RIA rules require IAs to have Rs. 25 lakh net worth. What are your views on capital adequacy requirement?
This requirement is for corporates. I think this requirement should be selective and should be made mandatory for institutional players. For other advisors, a fair net worth should be fixed to encourage many who intend to register as a corporate.
What are the compliance requirements after you become a RIA?
One needs to put checks and balances in place and ensure that all kinds of communication are recorded and maintained as required by SEBI. Disclose all facts to the client in writing or in a form of communication prescribed by the regulations. One needs to also buy professional indemnity insurance.
What would be your advice to IFAs who are considering registering with SEBI as RIA?
We are a very small community and many RIA’s are more than eager to help them in the process of registering. They can get in touch with me or others without any hesitation and I will be more than happy to help.
