SEBI Allows Investment Advisers, Research Analysts To Charge Advance Fees For Up To A Year; Details Here
The development follows the feedback submitted by RAs and IAs to the market regulator, seeking review of restrictions on charging advance fee from clients.
The Securities and Exchange Board of India (SEBI) has confirmed that Research Analysts (RAs) and Investment Advisers (IAs) will now be able to charge advance fees for up to one year. The decision is aimed at protecting investor interests and ensuring better regulation of the securities market, the market regulator noted.
“If agreed by the client, IAs and RAs may charge fees in advance, however, such advance shall not exceed fees for a period of one year,” the SEBI said in an official circular dated Apr. 2.
The development follows the feedback submitted by RAs and IAs to the market regulator, seeking review of restrictions on charging advance fee from clients. Earlier, RAs were able to charge fees for only three months in advance, while IAs could charge for up to two quarters. Following a review of their feedback submitted in Dec. 2024, SEBI said on Wednesday that the norms have been relaxed.
“SEBI considered this feedback and floated a consultation paper to increase the period of advance fee for one year by both IAs and RAs,” the release read.
However, SEBI added that these relaxations are not without certain provisions that need to be followed by the financial advisers to ensure compliance.
SEBI said that the revised norms related to charging fees apply only to individual clients or Hindu Undivided Families (HUF), provided they are not accredited investors. These rules do not apply to non-individual clients, accredited investors, or institutional clients seeking proxy adviser recommendations.
For these clients, the terms and conditions will be set through separate negotiations.
“In case of non-individual clients, accredited investors, and in case of institutional investors seeking the recommendation of proxy adviser, fee-related terms and conditions shall be governed through bilaterally negotiated contractual terms,” SEBI highlighted.
The new rules will take effect from the date of the circular’s issuance, which was April 2. RAs and IAs are financial professionals registered with SEBI, offering expert financial advice to their clients.
SEBI grants licences to individuals and entities seeking registration as IAs and RAs, provided they meet all necessary eligibility conditions.
Applicants who are members of BSE Administration and Supervision Limited (BASL), a supervisory and administrative body recognised by SEBI, can apply for an IA licence.
