SEBI Investment Advisor Checklist: Operations and Compliance Audits

The SEBI Investment Advisor Regulatory Framework

The Securities and Exchange Board of India (SEBI) regulates Registered Investment Advisors (RIAs) to protect retail investors. Achieving compliance requires structured operating procedures, fee caps, and advisory agreement templates. RIAs configure secure client onboarding loops to check qualifications, evaluate risk tolerances, and log advisory logs in compliance with SEBI rules.

SQL Schema for Client Risk Profiling Logs

SEBI requires RIAs to record client risk profiles and verify agreement signings. The following database table logs client records:

CREATE TABLE sebi_ria_clients (
  client_id UUID PRIMARY KEY DEFAULT gen_random_uuid(),
  client_name VARCHAR(128) NOT NULL,
  pan_number VARCHAR(10) NOT NULL,
  risk_profile VARCHAR(16) CHECK (risk_profile IN ('low', 'medium', 'high')),
  agreement_signed BOOLEAN DEFAULT FALSE,
  fee_inr_annual DECIMAL(10, 2) NOT NULL,
  profile_updated_at TIMESTAMP WITH TIME ZONE DEFAULT CURRENT_TIMESTAMP
);

This database supports risk checks, tracking client profile modifications.

Net Worth Requirements and Fee Ceilings

SEBI rules mandate distinct capital limits: a 5 Lakh net worth floor for individual RIAs, and a 50 Lakh net worth floor for body corporate advisors. Advisors must limit fees to 1.25% of assets under advice (AUA) or a flat fee of 1.25 Lakh per client annually. Maintaining a 100% advisory agreement execution rate is required before service delivery.

RIA Compliance Verification Config JSON

To automate compliance audits, investment platforms configure automated audit logs to check transaction compliance:

{
  "compliance_regulator": "SEBI",
  "audit_rules": {
    "max_flat_fee_inr": 125000,
    "max_aua_fee_percent": 1.25,
    "risk_profile_validity_months": 12,
    "agreement_enforced": true
  }
}

This configuration ensures that fee models follow SEBI ceilings, preventing licensing issues.

Advisory Agreement Execution and Audit Registers

RIAs must submit annual compliance audits conducted by an independent auditor. Advisors log client profiles, risk questionnaires, and advisory registers. Saving transaction records in secure cloud partitions verifies that advice aligns with documented risk profiles, passing SEBI audits.

Fee Cap Structures and Advisory File Segregation Rules

SEBI registered investment advisors (RIAs) operate under strict compliance constraints. SEBI limits advisory fees to a maximum of 1.25% of AUM annually, or a flat fee of ₹50,000 per year per client. Advisors must maintain clear records of client advisory logs.

Additionally, RIA systems must enforce data isolation, keeping advisory client databases separate from direct mutual fund execution platforms. Conducting yearly compliance audits ensures RIA platforms avoid conflicts of interest, protecting retail investors.