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How To Become A Registered Investment Adviser?
If you want to carry on investment advisory services for clients, you should become a registered investment adviser with SEBI. SEBI has some eligibility criteria and conditions that you must fulfill before applying for an investment adviser registration with SEBI.
About Components of The Gumasta Certificate of Maharashtra?
- Who Is An Investment Adviser?
- Eligibility Criteria For Registering As An Investment Adviser
- Documents Required For Registering As An Investment Adviser
- Investment Advisor Registration Process With SEBI
- Sections in The SEBI Registration Application Form
- Fee Structure For The Application With SEBI
- Conclusion
- FAQs How To Become Registered Investment Advisor
Who Is An Investment Adviser?
An investment adviser is a person who is engaged in providing investment advice to clients or other individuals or a group of individuals. Investment advice means the guidelines relating to dealing in securities or investment products, investing in purchasing or investing in selling. It also includes advice on the investment portfolio related to securities or investment products given to the client in written, oral, or any other form. It includes financial planning as well.
If you want to register yourself with SEBI as an investment adviser, you must fulfill the following criteria.
Eligibility Criteria For Registering As An Investment Adviser
As per regulation 7 of the Investment Advisor Act 2014, the following are the eligibility criteria to become an investment adviser in India:
1. Qualification
- An independent Investment adviser or a principal officer of a group investment advisory or a person associated with investment advice must at least have a professional qualification or postgraduate degree or post-graduate diploma (Should be minimum of 2 years in duration) in finance, business management, commerce, accountancy, capital market, economics, insurance, banking, or actuarial science from a university or an institution accredited by the central government or any state government or a recognised foreign university or institution or association.
- A professional qualification by doing a post-graduate program in the securities market (Investment Advisory) from NISM for a tenure not less than one year
- A professional qualification by getting a CFA Charter from the CFA Institute.
2. Experience
- An individual investment adviser or a principal officer of a non-individual should have at least 5 years of experience in activities relating to guidance for fund or asset or portfolio management or financial products or securities.
- A person just associated with investment advice must have an experience of at least 2 years in activities relating to advice in financial products or asset or portfolio management.
3. Certification
An individual investment adviser or a principal officer of a non-individual investment adviser or a person associated with investment advice should have a certificate on fund or asset or portfolio or financial planning or investment advisory services from- NISM
- Any other firm or institution including financial planning standards board of India or any recognized stock exchange in India if such certification is recognized by NISM.
You have to obtain a fresh NISM certification before the validity of the current certification expires. This is to make sure that certification requirements are Section 1. General Information fulfilled. A fresh NISM certification cannot be obtained through a CPE program.
4. Net worth
In the case of non-individual investment advisers, the net worth should not be less than INR 50 Lakhs. The net worth in the form of net tangible assets must not be lower than INR 5 Lakhs. The net worth certificate can be procured by a chartered accountant and shall be attached to the SEBI application form.5. Proper Infrastructure
You should have proper infrastructure which will include research software for undertaking investment advisory services, office space, office equipment, communication facilities, furniture, fixtures, and research capacity.6. Application and Fee Structure
After making sure that you meet the above criteria, you can proceed with making an application with SEBI for investment advisory. However, before applying, it is necessary to take in-principle approval from BASL.Documents Required For Registering As An Investment Adviser
- Identity Proof
- Address Proof
- Qualification Proof (Degree certificates, NISM exam certificates)
- CIBIL™ score
- Experience certificate in case of graduates (MF ARN card, insurance agency, etc.).
- Income tax returns for the most recent 3 years
- Net worth certificate from a chartered accountant (Minimum net worth requirement is Rs. 5 Lakhs for individuals and Rs. 50 Lakhs for non-individuals).
- Various declarations
Investment Advisor Registration Process With SEBI
The registration process is completely online.
1. Go to the SEBI intermediary portal by making the payment of the initial registration fee of Rs. 2000 (Earlier, it was Rs. 5000).
2. Fill out the investment adviser registration form on the SEBI intermediary portal and upload the pertinent documents.
3. Pay a registration fee of Rs. 3000 after application approval by SEBI.
4. Current amendment application fee is Rs. 10,000 (Previously, it was Rs. 50,000) and the registration fee is Rs. 15,000 (Earlier it was Rs. 5,00,000)
5. After getting an approval from SEBI as an investment adviser, it is mandatory to do the BSE registration also. The BSE registration fee is Rs 6000/- + GST (Individual) and Rs 3,00,000+ GST for non-individuals.
Sections in The SEBI Registration Application Form
Section 1. General Information
This section consists of the name, registered office address, contact details of the registered person, and other details. You also have to give inputs about your present and past activities, which are related to personal finance and investment.Section 2: Applicant Details
You have to upload the following copies:- Self-certified copies of identity proof, address proof, and supporting documents with respect to qualification.
- NISM investment adviser XA and NISM Investment adviser XB exam certificates
- 3 years income tax return
- Copy of a networth certificate from a chartered accountant
Section 3: Details about Investment Advisory Services ( Business Plan )
This is the most crucial section and here you have to upload a proper business plan, risk policy management system, and other necessary information.Section 4: Details of Infrastructure
You have to upload a complete list of infrastructure you have one by one and attach all the required proofs you have for infrastructure. You also have to upload a declaration regarding infrastructure.Section 5: Execution Services
Independent applicants must upload a declaration stating that they will not carry out any distribution and execution services after they have been granted the registration of investment adviser by SEBI.Section 6: Other Questions/Declarations/Information
There are lots of declarations required in the registration process for an investment adviser. This section requires you to upload all the other crucial information and the declarations.Section 7: Fees and Details
After filling out Form A online, it will be sent to your email ID. You have to send it along with the necessary documents and information to the nearest SEBI office. Fee details will be shown in Form A automatically.Fee Structure For The Application With SEBI
Type of Applicant | Application Fees (INR) Non-Refundable | Registration Fees (INR) |
|---|---|---|
Individuals and firms | 2,000 | 3,000 |
Body corporates including LLPs | 10,000 | 15,000 |
Conclusion
Currently, it is mandatory for all individuals or corporate bodies who are into the business of investment advisory to register with SEBI. It takes three to six months to get registered based on the time SEBI takes to respond. Considering that the process of registering is online now, it may be easy and seamless.
FAQs How To Become Registered Investment Advisor
1. How do investment advisers get paid?
Advisors and planners can either be compensated through flat fees or commissions. Fee-only financial advisors get paid for the services they provide rather than in the form of commissions for the products they sell or trade.
2. Why did I quit being a financial advisor?
The most common reasons for financial advisors quitting are difficulty in finding clients, burnout, and lack of satisfaction. Over 90% of financial advisors do not stay even for three years. This indicates a low retention rate for financial advisors. You need to be a successful financial advisor to be able to close a deal.