Aroha’s Investment Adviser License is coming up for renewal and in this regard, we recently submitted our application for renewal. Anguished with the unfair situation Corporate Fee Only Registered Investment Advisers (RIAs) find ourselves in, we wrote a separate letter to SEBI. The letter is posted here for the benefit of our customers

Date: 26-Sep-2018

Securities and Exchange Board of India

Dear Sir,

Subject: Request for reconsideration of fee structure for renewal of Investment Adviser Certificate and other matters

We have requested a renewal of our Investment Adviser Certificate INA200000175 in a separate letter dated 26-Sep-2018 along with the requisite fees of Rs 5,00,000/- (Rupees Five Lakhs Only). Nevertheless, I would like to bring to your kind attention that the pure fee only Corporate Registered Investment Adviser (RIA) entity as it exists today operates in an unfair environment – and will die a premature death. Kindly give me the opportunity to justify this statement through the points I list out below:

  • Under the SEBI Investment Adviser Regulations of 2013, RIAs are mandated to follow fiduciary standards. As a result, pure RIAs can and should operate in a fee only structure while their peers including Mutual Fund Distributors and Insurance Agents operate under significantly lower regulatory costs while at the same time collecting commissions – which is clearly the more advantaged business model.

  • Why should the fee structure for a private limited company be different from that of an individual? The fiduciary standard and other regulations are applicable to all RIAs – why then the double standards in the application of the fee structure?

  • The RIA industry is nascent. There is barely any supporting infrastructure for RIAs and If SEBI is serious about encouraging the fiduciary standard, the fee structure must in-fact be lower for RIAs.

  • Leaving aside the higher renewal and registration fee for Corporate RIAs, clearly the other regulatory costs associated with the fiduciary standard are higher. Why then make the fee structure even more onerous?

  • A higher fee structure for Corporate RIAs may be justified if they are allowed certain powers that are not allowed to other forms of RIAs – such as authority to provide discretionary advice. In the absence of any benefit whatsoever – there makes little sense in pursuing a Corporate RIA license unless the corporate is also having a distribution arm. In other words pure fee only Corporate RIAs who have started operations with the intention of giving genuine advice with minimal conflicts of interest are the biggest losers.

  • SEBIs consultation papers of Oct 2016, Jun 2017 and Jan 2018 are still yet to be finalized upon. This is killing the nascent RIA industry and while at the same time, entities with dubious ends in mind are springing up every day making use of the regulatory arbitrage that exists in the market today.

In the interest of bringing a strong fiduciary framework to investment advice in India, I request your good self and the concerned decision-making authorities within SEBI to bring about a level playing field for fee only Corporate RIAs.


Vivek Pai
Managing Director
Aroha Capital Pvt. Ltd.