SEBI Permits Investment Advisers to Offer Second Opinions on Existing Distributed Assets with 2.5% Fee Cap [Read Circular]
SEBI allows Investment Advisers to offer second opinions on clients’ existing distributed assets with a fee cap of 2.5% per annum
SEBI, Investment Advisers, Existing Distributed Assets
SEBI, Investment Advisers, Existing Distributed Assets
The Securities and Exchange Board of India (SEBI) issued a circular dated October 30, 2025, introducing new measures to make it easier for Investment Advisers (IAs) to provide services. The circular allows investment advisers to give second opinions to clients on their existing investment portfolios that were made under pre-existing distribution arrangements with other entities.
Under the existing rules of SEBI’s Master Circular for Investment Advisers, advisers could not charge fees on assets that clients had purchased through distributors or agents, as those assets already carried embedded distributor commissions.
This restriction meant that if a client wanted a second opinion on such investments, the investment adviser could not charge any advisory fee, limiting the adviser’s ability to serve those clients.
Responding to industry feedback, SEBI has now decided to relax this rule. According to the circular, investment advisers may charge advisory fees on such existing assets up to a maximum of 2.5 percent of the asset value per annum when providing a second opinion.
This change enables clients to seek independent professional advice even on products originally bought through distribution channels such as mutual fund distributors or brokers.
The circular also introduces conditions to protect investors. Investment advisers must disclose to their clients that, apart from the advisory fees payable to them, the client will continue to bear distributor-related costs on those assets. Moreover, advisers are required to obtain the client’s annual consent for such advisory arrangements. These steps aim to ensure transparency and informed decision-making.
The new provision also formally revises Clause 1(iii)(f) of the Master Circular for Investment Advisers to reflect these changes. SEBI stated that the new rule would take immediate effect, allowing advisers to begin offering second opinions right away.
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