SEBI’s 2020 IA Amendment Regulations – What Changed

The Securities and Exchange Board of India (SEBI) is the government body that keeps an eye on the stock market in India. In 2020, SEBI made some important changes to the rules for Investment Advisors (IAs). These changes were called the “SEBI Investment Advisers (Amendment) Regulations, 2020.” If you give financial advice, these rules affect you directly. If you are planning to become a Registered Investment Advisor, you need to understand these updates.

Learn how Advocate Lawyer Vikas Gupta, a leading SEBI lawyer in Delhi, can help you stay safe, follow the rules, and grow your advisory business without fear. Let’s dive in!

What Are Investment Advisers?

An Investment Adviser (IA) is someone who gives advice about investing in the stock market, mutual funds, or other financial products. They are required to register with SEBI before giving such advice. If someone gives advice for money but is not registered, it is illegal. SEBI made special rules in 2013 to guide IAs, and then updated them in 2020.

If you want to learn how to register as an IA, check out our guide on How to Get SEBI Registration as an Investment Advisor in 2025.

Why Did SEBI Amend the IA Regulations in 2020?

SEBI noticed some problems in the investment advisory industry:

• Unregistered persons giving financial advice
• Same person doing both advisory and selling products (conflict of interest)
• Clients were being overcharged or misled

So, SEBI introduced the 2020 amendment to protect investors and make sure only trusted professionals give advice.

Key Changes Introduced in SEBI’s 2020 Amendment

Let’s break down the important changes into easy points so you can understand what’s new:

Area	Before 2020	After 2020 (Amendment)
Client Segregation	IA could advise and sell products to same clients	IA and distributor must serve different clients
Fees	No cap on advisory fees	Fees capped at ₹1,25,000 per annum per client
Qualification	Basic degree in finance or related	Post-graduate qualification & 5 years’ experience
Net Worth	₹1 lakh (individual), ₹25 lakh (non-individual)	₹5 lakh (individual), ₹50 lakh (non-individual)
Agreement with Client	Not mandatory	Written agreement mandatory before advice
Risk Profiling	Basic profiling	Detailed profiling with risk suitability checks
Compliance Audit	Not compulsory for all	Mandatory every year if you serve over 150 clients

How Lawyer Vikas Gupta Can Help You Comply with These Rules

Lawyer Vikas Gupta is one of the best SEBI lawyers in Delhi. He has helped hundreds of advisors and research analysts like you. If you are confused about these new rules or scared of making mistakes, don’t worry. He offers:

• Legal services tailored for SEBI compliance
• Help in preparing correct documents
• Guidance for client agreement drafting
• Support in responding to SEBI show-cause notices
• Assistance in facing SEBI audits

Want help? Contact Lawyer Vikas Gupta today.

Client Segregation Rule Explained

This rule is very important. If you are a financial advisor and also sell mutual funds or insurance, you cannot serve the same person as both advisor and seller. This avoids conflict of interest. SEBI wants you to focus only on advising if you are a registered IA. For more on advisory firm rules, visit SEBI Legal Services for Advisory Firms.

Caps on Fees and Charges

To protect clients from being overcharged, SEBI now limits fees to:

• Flat fee: Maximum ₹1,25,000 per year per client
• Or, a 2.5% fee on Assets Under Advice (AUA)

You must also maintain invoices and share fee structure clearly. Want to see what happens if you overcharge? See Top SEBI Legal Violations and How to Avoid Them.

Risk Profiling – A Must Before Giving Advice

SEBI wants you to understand your client before giving advice. Now, you must ask:

• Client’s age, income, savings
• Risk-taking ability
• Financial goals

You must give advice only after matching their risk profile with investment products.

Written Agreement with Clients

Every Investment Advisor must now sign a formal agreement with each client before giving any advice. This agreement should include:

• Services offered
• Fees
• Duration of service
• Dispute resolution method

Need help drafting a proper agreement? Get in touch with Lawyer Vikas Gupta now.

Increased Qualification and Net Worth Requirements

SEBI raised the bar. Now to register as an Investment Advisor:

• You need a postgraduate qualification in finance, commerce, business, etc.
• 5 years of work experience in financial services
• Net worth of ₹5 lakh (for individuals), ₹50 lakh (for companies)

To see all eligibility rules, visit Who Can Apply for SEBI Investment Advisor License?

What Happens If You Don’t Follow These Rules?

SEBI can issue you a warning, fine, or even cancel your registration. Many advisors have received SEBI Show Cause Notices. If this happens to you, don’t panic. Learn how to respond legally here.

Note

The SEBI 2020 Amendment Regulations were made to protect investors and bring more trust to the advisory space. It is very important that all Investment Advisors understand and follow these new rules. Whether you are already registered or planning to become one, you need to stay compliant every day.

That’s where Lawyer Vikas Gupta comes in. With years of experience in SEBI matters, he helps you:

• Get registered
• Prepare documents
• Draft agreements
• Face SEBI audits
• Respond to legal actions

Need help? Book a consultation now.

Explore More

• SEBI Compliance Guide for Investment Advisors
• Monthly & Quarterly Compliance Reporting
• SEBI Code of Conduct for IAs

FAQs

What is the SEBI 2020 IA Amendment?

It is a set of changes made by SEBI to the rules that Investment Advisors must follow to ensure investor protection and reduce conflicts of interest.

Can I give financial advice without SEBI registration?

No. You must register with SEBI before giving financial advice for a fee. If you do it without registration, you can face legal trouble.

How much can I charge my clients after the 2020 amendment?

You can charge up to ₹1,25,000 per year per client or 2.5% of the client’s assets under advice.

Is a client agreement mandatory now?

Yes. SEBI now requires a written agreement with each client before you start offering advice.

Can the same person be an IA and a mutual fund distributor?

No. After the amendment, the same person cannot serve the same client as both an advisor and a distributor.

Where can I get legal help for SEBI matters?

You can reach out to Lawyer Vikas Gupta, a SEBI expert with years of experience helping advisors, research analysts, and firms.