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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 the segregation of advisory and distribution activities for an individual investment adviser?

An individual investment adviser must not provide distribution services to advisory clients, and clients cannot be forced to take distribution services from the adviser's family members. This segregation avoids conflict of interest. Commissions on advised products and verbal consent do not permit an exception.

  1. AThe adviser may provide distribution services to the same advisory client through a family member
  2. BThe adviser must not provide distribution services for products to advisory clients, and the client must not be obliged to avail of such services from the adviser's family membersCorrect
  3. CThe adviser may receive commission from a mutual fund on products recommended to advisory clients
  4. DThe adviser may provide distribution services if the client gives verbal consent

Explanation

Individual advisers must not offer distribution services to their advisory clients, and clients cannot be compelled to use distribution services of the adviser's family members, in order to prevent conflict of interest. Commission on advised products is not allowed, and verbal consent does not override the segregation requirement.

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