A SEBI-registered investment adviser (RIA) is a financial professional licensed by SEBI to help you plan and manage your investments the right way. Their role is to understand your goals, risk profile, and overall situation, and then guide you so your money decisions actually support the life you want.
In exchange, they charge you a transparent, pre-agreed fee instead of earning commissions on product sales.
Under SEBI regulations, RIAs can charge you either a fixed rupee fee or a fee linked to the assets they advise on, within prescribed caps and conditions.
In practice, this means two families with very different portfolios or levels of complexity may pay very different fees, even with the same adviser. Some prefer a simple flat or retainer-style fee, while others are comfortable with a percentage-of-assets model that goes up or down with their portfolio size.
This article breaks down the main ways an RIA can legally charge you under SEBI rules, what those models look like in real life, and how to decide which structure makes the most sense for your situation.
How can SEBI RIA charge?
As per SEBI there are only two ways SEBI RIAs can charge you.
- Fixed Fee Model:
In the fixed fee model, you pay a set amount every month, quarter, or year. No matter how much your money grows or falls, the fee stays the same. SEBI allows RIAs to charge up to ₹1.51 lakh per year per family. This fee does not change based on how much money you have invested.
- AUA (Percentage) Model:
The RIA charges a small percentage of your total investments. The fee can be typically between 0.5% to 1.5% per year. SEBI allows RIA to charge maximum up to 2.5% per year per family. For example, if you have ₹50 lakh invested, the RIA can charge up to ₹1.25 lakh per year (2.5% of ₹50 lakh).
Pros and con
Pros of fixed fee model
- You know exactly how much you’ll pay every month, quarter, or year, so it’s easy to budget for the advice.
- The fee does not go up just because your investments grow, so as your portfolio gets larger, the effective cost (as a percentage) can actually become cheaper.
- Since the fee is not linked to the size of your investments, there is less incentive for the advisor to push you to take unnecessary risks just to grow AUM.
Cons of fixed fee model
- If your portfolio is small, a fixed fee (say ₹25,000–₹50,000 a year) can feel expensive as a percentage of your net worth.
- In very quiet years where you don’t need much hand-holding, you might feel you are “overpaying” for the limited interaction.
- For some investors, paying a lump-sum or fixed cheque feels more painful than a percentage quietly deducted from the portfolio.
Pros of AUA (percentage) model
- The fee naturally adjusts with your portfolio size, so if you are just starting out with a smaller amount, the absolute rupee fee can be lower.
- When your advisor earns more only if your portfolio grows, it can create a sense of “skin in the game” and alignment with your long-term outcomes.
- You do not have to write a separate cheque; the fee can be calculated as a percentage and is easy to understand (for example, 1% per year).
Cons of AUA (percentage) model
- As your portfolio becomes larger, the rupee fee can shoot up even if the actual work for the advisor has not increased proportionately.
- In bad market years, paying a percentage fee on a falling portfolio can feel frustrating because you see your value down and a fee still going out.
- For very high AUA, a percentage fee can work out costlier than a sensible fixed-fee arrangement, even when SEBI puts a cap on the maximum rate.
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Fixed fee vs AUM model: What is better for you?
The choice between the fixed fee model and the AUA (percentage) model depends on your financial situation and preferences.
If you want to know exactly how much you will pay every year and like simple, predictable costs, the fixed fee model is better. It works well if your investments are stable or you don’t want your fees to change with market ups and downs.
If you want your advisor to grow with you and earn more only when your money grows, the AUA (percentage) model is better.
This model is good if you have a large portfolio or expect your investments to increase over time. Many people like this because the advisor’s success is linked to your success.
Think about what matters more to you—predictable costs or sharing growth with your advisor. Pick the model that fits your financial personality and comfort level.
What SEBI RIAs cannot charge you?
SEBI has clearly stated what your RIA cannot charge you.
- RIAs cannot earn commission from selling financial products under the purview of SEBI like mutual funds.
- RIAs cannot take hidden charges that are not disclosed upfront.
Any advisor charging these ways is not following SEBI rules. You should avoid them.
Before you hire an RIA, they must give you a written agreement. The agreement should clearly state:
- The exact fee you will pay and how often it will be charged.
- What services they will provide (like investment advice, planning, or monitoring).
- Conflicts of interest — any situation where the advisor’s interests might not match yours.
- How they handle complaints if something goes wrong.
SEBI also requires RIAs to tell you about the Centralized Fee Collection Mechanism, which is a safe way to pay your advisor’s fees.
This transparency protects you and makes sure there are no surprises later.
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Conclusion
SEBI’s rules on RIA charges make India’s advisory system safe and transparent. By capping fees, banning commissions, and requiring clear agreements, SEBI protects your money. When choosing an RIA, always check if they are registered with SEBI, ask about their exact fee structure—fixed or percentage—and get a written agreement before you give them any money.
Make sure they are fee-only advisors with no hidden commissions. The right RIA will be transparent, honest, and focused on your financial goals—not on earning extra money through commissions. This is what makes SEBI RIAs trustworthy professionals you can rely on for your financial future.
