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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Key Regulations

Under the SEBI (Investment Advisers) Regulations, 2013, which of the following is a requirement relating to an investment adviser's dealings with clients?

An investment adviser must execute a written agreement with each client and cannot manage or handle client funds or securities, as that would amount to portfolio management. Guaranteeing returns or sharing client data for commissions is prohibited.

  1. AThe adviser may accept client funds for investing if the client gives verbal consent
  2. BThe adviser must enter into a written agreement with the client and must not manage client funds or securities on the client's behalfCorrect
  3. CThe adviser may guarantee minimum returns if the client is a high net worth individual
  4. DThe adviser may share client data freely with product issuers to earn commission

Explanation

Advisers must have a written agreement with the client and are barred from managing client funds or securities, since discretionary management is portfolio management, a separate activity. Guaranteeing returns and unauthorised sharing of data breach the regulations.

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