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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Risk Profiling for Investors

Under the SEBI (Investment Advisers) Regulations, 2013, an investment adviser must undertake risk profiling of a client. Which statement is correct?

The adviser must ensure advice and products are suitable to the client's risk profile and maintain records of the profiling. The obligation applies to all clients, is not permanent, and cannot be delegated to a product issuer; the profile must be reviewed as circumstances change.

  1. ARisk profiling is needed only for clients who ask for equity advice
  2. BA risk profile once assigned is valid permanently and need not be revisited
  3. CThe adviser must ensure that advice and products are suitable to the client's risk profile, and keep records of the profilingCorrect
  4. DRisk profiling may be done by the product issuer and the adviser may rely on it without review

Explanation

Regulations require the adviser to obtain information, assess risk profile and ensure suitability of advice, maintaining records. It applies to all clients, should be updated as circumstances change, and responsibility cannot be outsourced to a product issuer.

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