Investment Advisors are required to ensure client level segregation: SEBI

SEBI Informal Guidelines SEBI/HO/IMD/DF1/OW/P/2022/21437, Dated: 20.05.2022

The SEBI registered Investment Advisor vide letter dated March 4, 2022, sought an interpretative letter under the SEBI (Informal Guidance) Scheme, 2003 on the issue that in case, add-on services are provided to the client, then whether the separate fee will be charged for the same along with AUA based fee being charged for investment advisory. SEBI clarified that a non-individual Investment Advisor is required to ensure client level segregation at the group level for investment advisory and distribution services.

Further, the SEBI clarified that the same client cannot be offered both advisory and distribution services within the group of the non-individual entity. A client can either be an advisory client where no distribution consideration is received at the group level or distribution services client where no advisory fee is collected from the client at the group level. Thus, a separate fee is required to be charged.

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