CIRCULAR
HO/38/12/11(1)2025-MIRSD-POD/ I/71/2025 October 30, 2025
To,
All Registered Investment Advisers
Investment Adviser Administration and Supervisory Body (IAASB)
Madam / Sir,
Sub: Ease of doing business measures - Enabling Investment Advisers (“IAs”)
to provide second opinion to clients on assets under pre-existing
distribution arrangement
1. Clause 1.(iii)((f) of the Master Circular for Investment Advisers specifies that any
portion of Assets Under Advice (“AUA”) held by the client under any pre-
existing distribution arrangement with any entity shall be deducted from AUA for
the purpose of charging fee by the IA and hence IAs are not allowed to charge AUA
based fee on such assets.
2. Industry association of IAs has represented that, if a client desires to avail a second
opinion on assets, which are under any pre-existing distribution arrangement with
any entity, the above provision restricts their ability to serve such clients and hence
have sought that IAs should be permitted to charge AUA based fee in such
scenarios and provide second opinion to their clients.
3. Considering the above and in order to provide investors the opportunity of obtaining
a second opinion on assets under pre-existing distribution arrangement with other
entity, if so desired, the following has been decided:
3.1. IAs may charge fee on such assets subject to a limit of 2.5% of such assets
value per annum.
3.2. In such cases, IAs must disclose and seek consent from such clients (on
annual basis), that apart from the advisory fees payable to the IA, the clients
will be incurring costs towards distributor consideration for such assets.
4. In view of above, the clause 1.(iii)((f) of the Master Circular for Investment Advisers
shall stand revised and read as under:
“For clients seeking second opinion on assets under pre-existing distribution
arrangement with other entity, IAs may charge fee on the assets under pre-existing
distribution arrangement under AUA mode, subject to a limit of 2.5% of such assets
value per annum. IAs shall, on annual basis, disclose and seek consent from such
clients that apart from the advisory fees payable to the IA, the clients will be
incurring costs towards distributor consideration for such assets.”
5. The provisions of this circular shall come into effect immediately.
6. This circular is issued in exercise of powers conferred under Section 11(1) of
Chapter IV of the Securities and Exchange Board of India Act, 1992 read with
Regulation 15A of the SEBI (investment Advisers) Regulations, 2013 to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities markets.
7. This circular is available on SEBI website at www.sebi.gov.in under the category:
‘Legal → Circulars.
Yours faithfully,
Aradhana Verma
General Manager
Tel. No. 022-26449633
E-mail: aradhanad@sebi.gov.in