RIA (Registered Investment Adviser) for mutual funds in India

A SEBI-registered investment adviser (RIA) is an individual or entity registered with the Securities and Exchange Board of India under the SEBI (Investment Advisers) Regulations 2013 to provide investment advice to clients for a fee. In the context of mutual fund distribution, RIAs represent the fee-based advisory model as distinct from commission-based mutual fund distributors (MFDs). SEBI introduced the RIA framework to create a formal category of fiduciary advisers who charge clients directly for advice rather than receiving commissions from product manufacturers.

As of March 2025, SEBI’s data showed approximately 1,300 registered investment advisers in India – a number that is significantly smaller than the over one lakh AMFI-registered mutual fund distributors, reflecting the higher regulatory barriers to RIA registration and the continuing preference of distribution intermediaries for the commission-based MFD model.

Regulatory framework

SEBI (Investment Advisers) Regulations 2013

SEBI notified the Investment Advisers (IA) Regulations on 21 January 2013, creating the RIA category for the first time. Key provisions of the 2013 regulations:

• Definition of investment advice: Advice relating to investing, purchasing, selling, or otherwise dealing in securities or investment products, including financial planning
• Registration requirement: Any person providing investment advice for consideration must register with SEBI as an investment adviser
• Prohibition on commissions: Registered investment advisers may not receive commissions, brokerage, or any other consideration from product manufacturers for products on which they advise clients
• Fee disclosure: Advisers must disclose their fee structure to clients and obtain written consent before providing advice
• Fiduciary standard: Advisers must act in the best interest of clients

2020 amendment

SEBI amended the IA Regulations significantly in September 2020 through SEBI/LAD-NRO/GN/2020/49, introducing several important changes:

• Advice-execution separation: An individual RIA may not execute transactions for clients on their own platform; clients must execute on a separate execution-only platform (EOP) or AMC portal. Corporate RIAs may execute through a separately operated execution platform with defined firewalls.
• Minimum qualification: The regulations prescribe minimum qualification requirements: a professional qualification (CA, CFA, MBA Finance, or equivalent) or NISM Series X-A and X-B certification for the principal officer.
• Net worth requirement: Individual RIAs must have a minimum net worth of Rs. 5 lakh; corporate RIAs must have a minimum net worth of Rs. 50 lakh.
• Client category restriction: Individual RIAs are restricted to a maximum of 150 advisory clients at any time; corporate RIAs face no such limit.
• Fee model clarity: Two permitted fee models: (a) a fixed fee per plan per client, or (b) an AUM-based fee (not exceeding 2.5% per annum for direct plan portfolios, subject to conditions).

EOP framework (2023)

SEBI’s EOP regulations 2023 defined Execution-Only Platforms separately from RIAs, formalising the advice-execution separation that the 2020 IA Regulations had mandated. Under the combined framework, platforms such as Kuvera and ET Money operate both as RIAs (for their advisory products and personalised recommendations) and as EOP-compliant platforms (for transaction execution).

Eligibility and registration process

Individual RIA

An individual wishing to register as an RIA with SEBI must satisfy:

1. Educational qualification: Post-graduate degree in Finance, Commerce, Accountancy, Economics, Business Management, or a professional certification (CA, CFA, CFP, ICWA), or a post-graduate degree in any discipline plus relevant professional certification
2. Examination: Pass NISM Series X-A (Investment Adviser Level 1) and NISM Series X-B (Investment Adviser Level 2) certifications from the National Institute of Securities Markets
3. Experience: Minimum five years of experience in activities relating to advice in financial products or securities or fund management
4. Net worth: Minimum Rs. 5 lakh tangible net worth
5. Fit and proper criteria: SEBI’s standard fit and proper criteria apply (no conviction for offences involving fraud, no insolvency proceedings, etc.)

The registration application is submitted through SEBI’s online registration portal (sebi.gov.in). SEBI reviews the application and may seek clarifications before granting registration.

Corporate RIA

A company, LLP, or partnership wishing to register as a corporate RIA must satisfy higher thresholds:

• Minimum net worth of Rs. 50 lakh (or Rs. 1 crore for advisory revenue exceeding a threshold – the exact thresholds are as per the amended regulations)
• Principal officer meeting individual qualification and examination requirements
• Compliance officer designation
• Board-level oversight of the compliance function

Fee models

The 2020 IA Regulations prescribe two permitted fee structures for RIAs:

Fixed fee per service

An RIA may charge a fixed fee per financial plan, per advice engagement, or per annual advisory relationship. This model is common for individual RIAs serving retail clients who want a defined cost for a specific planning engagement.

AUM-based fee

An RIA may charge a periodic fee as a percentage of assets under advice, subject to SEBI-prescribed caps. The AUM-based fee model resembles the trail commission model used by MFDs but is charged directly to the client rather than paid by the AMC.

Prohibition on hybrid model

An RIA registered with SEBI may not simultaneously act as an AMFI-registered mutual fund distributor receiving trail commissions for the same clients. The regulations require a clean separation: an adviser who holds both an ARN and an RIA registration must separate clients into advisory (RIA) and distribution (MFD) categories and ensure no cross-subsidy.

Distinction from mutual fund distributor (MFD)

RIA platforms in the mutual fund ecosystem

Several platforms operating in the Indian mutual fund direct-plan space hold RIA registrations:

• Kuvera: RIA registration for advisory features; EOP for direct-plan execution
• ET Money: RIA registration underlying the Genius advisory tier
• INDmoney: RIA registration for advisory products; EOP for execution
• Fisdom: SEBI-registered RIA offering financial planning and direct-plan investing
• Wealthy.in: SEBI-registered RIA
• Scripbox: Operates under RIA registration for its curated fund-of-funds selection model

Significance and industry trends

The RIA model in India remains nascent compared to equivalent fee-only adviser models in the United States (Registered Investment Advisers under the SEC) or the United Kingdom (Independent Financial Advisers under FCA). The vast majority of Indian mutual fund distribution continues through the commission-based MFD channel, driven by the dominant bank distribution network and the large IFA ecosystem.

However, the RIA model has grown in relevance as financially sophisticated investors – particularly those with larger portfolios – recognise the conflict-of-interest risk inherent in commission-based advice and seek fee-based alternatives. SEBI’s regulatory direction has consistently favoured expanding the RIA framework as the long-term model for investment advice in India.

References

• SEBI Investment Advisers Regulations 2013 (sebi.gov.in/legal/regulations)
• SEBI amendment to IA Regulations (SEBI/LAD-NRO/GN/2020/49, September 2020)
• SEBI circular on Execution-Only Platforms (SEBI/HO/IMD/IMD-POD-1/P/CIR/2023/74)
• NISM Series X-A and X-B examination structure (nism.ac.in)
• SEBI registered investment adviser list (sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes)