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CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising

Rohan, a SEBI-registered investment adviser, charges clients fees for advice. Which conduct is consistent with the regulatory framework for investment advisers?

Rohan should charge a fee, profile the client's risk and ensure suitability, and keep advisory and distribution activities separate for the same client. Taking commission from products recommended to that client, guaranteeing returns or skipping suitability breaches the SEBI Investment Advisers framework.

  1. AReceiving distribution commission from a mutual fund for products recommended to the same client
  2. BCharging a fee for advice while keeping advisory and distribution activities separate, with risk profiling of the clientCorrect
  3. CGuaranteeing returns to attract clients
  4. DAdvising without any client suitability assessment if the client insists

Explanation

Under SEBI's Investment Advisers Regulations, advisers must assess client risk profile and suitability, charge fees from the client and keep advisory separate from distribution for the same client. Guaranteeing returns and taking commission on the same client's products are prohibited, and skipping suitability is a violation.

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