Though fee-based advisory regulations were first introduced in 2013, the RIA model has struggled to gain pace. The number of RIAs has actually declined from about 1,300 a few years ago to 967 now.
But is the drop in numbers all negative? “The drop also reflects the exit of some non-serious players and trading call providers after the regulatory amendments in 2025. The drop is welcome in that sense,” Renu Maheshwari, co-founder of Finscholarz, member of Sebi’s intermediary advisory committee, and the chairperson of Association of Registered Investment Advisers (ARIA) said.
Maheshwari, in an interview with Mint, said while rules are easing, the investor mindset will take time to evolve. “It took Indian investors two decades to trust equities. Behavioural changes such as paying for advice may take a generation. Till then, serious RIAs must focus on building sustainable practice.”
“A tipping point will eventually come. Advisers like us who have been in the business for over a decade don’t advertise, but we get clients consistently.”
What Sebi has proposed
Sebi’s January 2025 circular tackled several long-standing challenges for registered investment advisers (RIAs), raising the client cap for individual RIAs from 150 to 300, lowering the net-worth requirement for corporate licences to ₹10 lakh from ₹50 lakh, limiting minimum qualification to a finance graduation degree, and removing the earlier five-year experience criterion.
“Some issues persisted, 90% of which have now been addressed in the latest consultation paper,” said Maheshwari, who is also co-chair of Industry Standard Forum, an industry body under stock exchanges to frame regulatory standards with stakeholder feedback, in consultation with Sebi. The paper is open for public comments until 28 August.
Among key proposals, graduates from any discipline can now apply for an RIA licence. While this move is seen as broadening access, some fear it could dilute the quality of the profession. Maheshwari said Sebi will ensure the NISM X-A and X-B exams are rigorous enough to filter only qualified candidates. NISM X-A and X-B are entry-level exams for individuals seeking to become RIAs.
To be sure, RIAs cannot showcase past returns to clients. The consultation paper allows disclosing it to clients or prospective clients—only on their request—if it’s certified by a professional such as chartered accountant, company secretary, or cost accountant and accompanied by a disclaimer.
Once Sebi’s Past Risk and Return Verification Agency (PaRRVA) gets operational, they can use PaRRVA-certified metrics in advertisements or in public communication.
Another significant proposal is allowing RIAs to charge a fee for giving second opinions. “Clients often seek validation on assets retained with distributors or financial institutions like banks without wanting to move them. Earlier, we couldn’t charge for such unbiased advice. If this is accepted, we will finally be able to,” Maheshwari said.
“All the extremely stringent compliances and entry barriers introduced in 2020 have now been amended. Sebi has clearly defined the direction of the advisory business.”
What is still missing
Maheshwari highlighted two recommendations that have not been included in the consultation paper but are currently under discussion and deserve utmost attention: an advertisement code and the way fees are collected.
RIAs are supposed to follow a detailed advertisement code that restricts them from communicating freely about their practice. “This code is quite suffocating, to say the least, which restricts RIAs from talking or saying anything on a public platform. Currently, every advertisement, website, etc must be approved by the regulator.
Advertisement code should have the negative list and file-and-use system. The system should encourage the RIAs to talk more in public forums. This will help deal with the problem of finfluencers, who do not fall under any jurisdiction. Sebi can immediately catch and penalise advisors for their wrongdoing.
Meanwhile, Sebi has promoted centralized fee collection mechanism (CeFCoM) along with BSE and MFU (MF Utilities). It is currently an optional system for RIAs. “We have requested Sebi to consider a few other methods for fee collection from clients.”
Paying a fee for advice is still uncommon in India. “For fiduciary practice to grow, we need robust, easy-to-use, multiple fee collection systems. This is a behaviour modification that we must aim to achieve through technology.”
Myth: RIAs are only for the affluent
Critics often say that the RIA model caters only to the wealthy because of high advisory fees. However, Sebi caps client fees in two ways: 2.5% of assets under advisory annually, or a flat/fixed fee, capped at ₹1.25 lakh per client per year. While some advisers prefer working with high-net-worth individuals (HNIs) and ultra HNIs, others run models for mass clients.
Maheshwari said her firm follows the AUA model. “Whatever the value of assets is at the start of the year, a fixed percentage of it becomes our fee. We don’t average it monthly or daily,” she said.
She added that RIAs differ in approach. “Some charging fixed fees cater to regular masses, others prefer HNIs or UHNIs. It’s about personal choice, but certainly a good number of RIAs are serving mass clients.”
Pointing to her firm’s own packages for young investors with modest wealth, Maheshwari said, “We advise youngsters on SIPs, insurance, and basic planning. We set them on a financial path and ask them to return for review after three years. Most do come back. That’s our mass model.”
Building a career as an RIA
With regulatory relaxations, becoming an RIA now requires only a graduate degree with no prior experience. However, Maheshwari underlined a bigger gap: skills.
“Advisory is not sales or distribution. It’s consulting. You need subject expertise and empathy to solve client money issues. You also need official set-up and structured processes to serve clients at scale. Without that, most advisers can’t handle more than 20–25 clients. Personal finance isn’t taught in colleges. Where will this advisory talent and business acumen come from?” she asked.
Besides its existing skill development programme, ARIA plans to include the certified financial planner (CFP) programme. “We believe CFP provides a well-rounded skillset to run an advisory practice. The proposal is with NISM and Sebi,” Maheshwari said.
When it comes to building a successful advisory practice, fresh graduates are better off training under an established RIA or advisory firm before striking out on their own.
“You may qualify for a licence, but there’s no substitute for hands-on experience. As a fresher, what real value can you offer clients? I always advise gaining at least 5–10 years with seniors before setting up independently,” she said.
