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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

Under the SEBI-prescribed framework, a distributor who also wants to charge a separate fee for advice to the same client in respect of mutual fund investments should recognise that:

Charging a fee for investment advice requires separate registration as an investment adviser with SEBI, and the advisory and distribution businesses must be segregated to manage conflicts of interest. An ARN alone does not authorise advisory services.

  1. ADistribution and advisory activities can be freely combined under the ARN alone
  2. BAdvisory services require separate registration as an investment adviser, and the distributor must ensure segregation of the two activitiesCorrect
  3. CAdvice may be given only if the AMC approves it in writing for each client
  4. DAdvice is allowed once the distributor has completed five years of ARN validity

Explanation

Giving investment advice for a fee requires registration as an investment adviser under SEBI regulations. The advisory and distribution activities must be kept separate to manage conflict of interest. An ARN alone does not permit fee-based advice.

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