Agents, CAs, Lawyers, Doctors and Teachers can become a Part Time Registered Investment Advisers RIAs

Agents, CAs, doctors, lawyers; now, anyone can become a part time adviser: SEBI

SEBI has gazetted the Investment Advisers regulations in which it has introduced the concept of part time registered investment advisers (RIAs).

Under this, anyone who does not deal with investment and security markets like agents, Chartered Accountants (CAs), lawyers, doctors and teachers can become a part time RIA.

Securities and Exchange Board of India  (SEBI) clarified that an employee can also become a part time RIA provided she obtains a no objection certificate from her/ his employer. Further, if an employee switches jobs, there is no need to obtain NOC again.

Mutual fund distributors (MFDs) can not become part time RIAs since they deal with security market products, clarified SEBI.

Part time RIAs can charge fees or consideration from their clients in lieu of financial advice. They will have to disclose that they are part time RIAs.

Also, the part time RIAs will have to ensure maintaining arms-length distance between both the activities. SEBI clarified that part time RIAs can service up to 75 clients. Another important development is that stock tippers can not call themselves RIAs.

Here are the other key proposals relevant to the advisory community:

A person having a graduate degree can become an individual RIA or principal officer of an RIA firm

RIAs will have to have relevant NISM certification all the time i.e. NISM XA and XB to continue the business. Such a certification has to renewed before the expiry of the validity of the existing certification to ensure continuity in compliance

SEBI has allowed individual RIAs to corporatise their business after attaining 300 clients or Rs.3 crore fee revenue during a financial year. So far, RIAs having 150 clients have to obtain a non-individual license to continue the business

RIAs can use AI tools to provide investment advice but they will have to maintain confidentiality and security of client data

Investment advice on various assets like gold, real estate which are not regulated by financial regulators and other ancillary services such as estate planning and tax planning will not be considered under the scope of advice. RIAs offering such services will have to put out a disclaimer that these products and services are outside the purview of SEBI and there is no recourse from SEBI to clients for any grievances

RIAs must maintain a functional website containing all details

Non-individual RIAs will have to appoint a compliance officer or an independent professional who is a member of Institute of Chartered Accountants of India, Institute of Company Secretaries of India or Institute of Cost Accountants of India.

 

Share: