Common Mistakes SEBI Investment Advisers Make

Last updated: 21 October 2026

The most common SEBI investment adviser mistakes are giving advice before the client agreement is signed and the risk profile is consented, offering free trials or taking part payments, collecting fees outside traceable banking channels, and keeping incomplete records of client conversations. Each one breaks a specific rule in the SEBI (Investment Advisers) Regulations, 2013 or the IA master circular, and each is easy to prevent with a fixed onboarding order and good records. A CRM built for SEBI investment advisers helps you keep that order and those records in one place.

This post draws on the IA Regulations as amended up to 25 November 2025, the IA master circular dated 6 February 2026 and SEBI's IA FAQs. It is not legal advice: check the current SEBI and IAASB rules before you change your process.

This looks like a quick view on a prospect's portfolio during the first call, or advice sent on WhatsApp while the agreement still awaits the client's signature.

Regulation 19(1)(d) requires an investment advisory agreement with every client, and the IA master circular says no advice may be given and no fee charged until the client has signed the agreement and received a copy. The agreement must include SEBI's mandatory terms and the Most Important Terms and Conditions (MITC), and can be signed by any legally acceptable mode, including DigiLocker-enabled Aadhaar e-signature.

To avoid it, keep a fixed order: KYC, agreement and MITC, risk profile, payment, and only then advice. Finuro's client onboarding sequence runs KYC, MITC, risk assessment and payment as steps you configure, with Aadhaar e-sign through Digio or Cashfree.

A common version is a questionnaire the client fills in, a score your system calculates, and advice that follows straight away. What is missing is the client's agreement to the profile itself.

Para 2.2 of the master circular says an IA may advise only after completing the risk profile from the client's information and getting the client's consent on the completed profile, through registered email or a physical document. Regulation 16 also requires you to communicate the profile and update it periodically, and Regulation 17 requires each piece of advice to suit it.

To avoid it, send the completed profile to the client and keep their consent with the profile and its date, and review profiles when a client's circumstances change. Our risk profiling and suitability guide includes a sample questionnaire outline.

Free trials and "pay half now, half later" offers get copied from other subscription businesses. For IAs, both are prohibited.

Para 2.1 of the master circular says IAs shall not provide a free trial of any product or service to prospective clients, because advice must come after risk profiling and a suitability check. The same paragraph bars part payments, where only part of the fee is paid in advance.

To avoid it, remove trial periods and split-payment options from advisory plans, your website and your sales scripts. If your billing software supports trials, as Finuro's subscription billing does, leave them switched off for advisory services.

Fee errors usually come from counting the cap per person instead of per family, or forgetting that one cap covers all your services together.

Under the master circular, an IA may charge either up to 2.5% of assets under advice (AUA) a year per family of client, or a fixed fee of up to ₹1,51,000 a year per family, across all services. The limits exclude statutory charges and apply only to individual and HUF clients who are not accredited investors. Advance fees are capped at one year, unexpired fees are refunded on early termination, and any breakage fee cannot exceed what the circular calls a "one-quarter fee".

To avoid it, capture dependent family members at onboarding, total each family's fees before renewals, and write the advance period and refund method into the agreement. Our guide to IA fees and client agreements includes worked examples.

This looks like a client depositing cash straight into your bank account, paying to a staff member's UPI ID, or paying through a route that leaves no clear trail back to the client.

Para 2.3 says IAs must accept fees only by account payee crossed cheque, demand draft or direct credit to their bank account through NEFT, RTGS, IMPS or UPI, and must not accept cash deposits. SEBI noted that some IAs used payment gateways without a proper audit trail. Since SEBI's circular of 11 June 2025, IAs must also obtain a validated "@valid" UPI ID and offer it to clients.

To avoid it, collect only into accounts in the IA's own name, keep a receipt and payment reference for every fee, and confirm with your compliance adviser or IAASB that any gateway route you use meets the traceability standard.

Some advisers send intraday ideas, or the same buy and sell calls to every client.

SEBI's IA FAQs define trading calls as intraday, ultra-short-duration or non-delivery recommendations (other than hedging), or any recommendation that is not personalised to the investor. An IA cannot provide them, as they are not investment advice.

To avoid it, keep advice personal, tied to each client's profile and documented with its rationale. Non-personalised research needs RA registration; see RA and IA dual registration.

Typical examples are recommending a regular plan that pays trail commission, or a family member selling insurance or mutual funds to your advisory clients.

Regulation 15(2) says an IA must not receive any consideration from anyone other than the client for the products it advises on. An individual IA cannot provide distribution services, its family cannot sell distribution products to its advisory clients, and implementation must use direct plans with no commission at group or family level.

To avoid it, keep client-level segregation between advisory and distribution clients across your group, recommend direct plans only, and disclose any conflict of interest as it arises, as Regulation 15(1) requires.

Advice is often given on personal mobiles or in chats that are never saved, so when a complaint comes there is no record of what was said.

Regulation 19(1) requires records of advice given (written or oral), its signed and dated rationale, and communications including emails and call recordings with clients and prospective clients. The master circular says interaction records begin with the first advice-related conversation, even before onboarding, and can be telephone recordings, emails from the registered email ID, SMS records or other legally verifiable records, kept for five years. The investor charter also commits IAs to deal with clients only from an official number.

To avoid it, use one official number and official channels, record or log every advice conversation, and save the rationale with each piece of advice. Finuro's unified inbox brings email, WhatsApp and Telegram conversations together; see communication records.

Examples include a reel showing last year's portfolio gains, a "best adviser in Pune" banner, or client testimonials on a landing page.

Section 10 of the master circular applies the advertisement code to IAs. Adverts need prior approval from IAASB and must not imply assured or target returns, use superlatives such as "best", or cite past performance unless the risk-return metrics are verified by PaRRVA. A common advertisement code notified in October 2026, due to apply from around April 2027, also bans testimonials and inducements such as coupons, vouchers or subscription plans.

To avoid it, put every promotional communication through a compliance check and IAASB approval before it goes out.

Individual IAs can outgrow their limits unnoticed, and filings slip when the practice is busy.

An individual IA must start moving to non-individual registration once clients exceed 300 at any time or fees in a financial year exceed ₹3 crore, informing IAASB and applying for in-principle approval within three months. A part-time IA may have at most 75 clients. Recurring items include the half-yearly report to IAASB within 30 days of each period end, the annual compliance audit, complaint data on your website by the 7th of each month, and a deposit revision by 30 April if you change client slab.

To avoid it, track client and fee counts monthly and keep a dated compliance calendar. Our IAASB filings and IA compliance checklist lists each item.

• Signed agreement with MITC, copy given to the client, before any advice or fee.
• Completed risk profile with the client's consent on file; suitability checked for every piece of advice.
• No free trials, no part payments, fees within the per-family cap.
• Fees only through traceable banking channels into the IA's own account.
• Personal advice only: no trading calls, no commissions.
• Records of every advice conversation, approved adverts and a dated compliance calendar.

Finuro brings KRA checks, a configurable onboarding sequence, your own risk profiling questionnaire and an audit trail into one system. It does not file with IAASB or give legal advice. See how a CRM for SEBI investment advisers supports each check.

• Risk profiling: your own questionnaire, completed online by clients
• Client consent records: Aadhaar e-signed agreements and consent PDFs
• Communication records: client conversations kept in one place
• Audit trail: who changed a client record and when