Despite recent regulatory relaxations by the Securities and Exchange Board of India (Sebi), the number of new Registered Investment Adviser (RIA) applications continues to stagnate, raising questions about the effectiveness of reforms aimed at expanding India’s advisory ecosystem. While Sebi’s intent to simplify onboarding and reduce entry barriers is evident, industry experts argue that deeper structural challenges remain unaddressed—chief among them being compliance overload, cost of operations, and lack of clarity around fee models.
Sebi’s latest amendments, announced earlier this year, included easing net worth requirements for individual RIAs, allowing greater flexibility in client onboarding, and streamlining audit timelines. However, data from the regulator shows that RIA registrations have grown by less than 3% in the past six months, with several existing advisers opting to surrender their licenses due to operational stress.
RIA Registration Trends – Post Sebi Relaxations (2025)
| Period | New RIA Applications | Licenses Surrendered | Net Growth | Commentary |
|---|---|---|---|---|
| Jan–Mar 2025 | 42 | 18 | +24 | Initial optimism post announcement |
| Apr–Jun 2025 | 37 | 22 | +15 | Momentum slows |
| Jul–Sep 2025 | 33 | 29 | +4 | Near stagnation |
The core issue, according to many advisers, lies in the cost-to-compliance ratio. While Sebi has reduced the net worth requirement for individuals from ₹5 lakh to ₹3 lakh, the cost of maintaining audit trails, client documentation, and tech infrastructure remains disproportionately high—especially for solo practitioners and boutique firms.
“Relaxations are welcome, but they don’t change the ground reality. The compliance burden is still heavy, and the business model is not viable unless you scale fast,” said a Mumbai-based RIA who recently exited the profession.
Key Pain Points Hindering RIA Growth
| Challenge Area | Impact on RIAs | Suggested Reform |
|---|---|---|
| Compliance Costs | High audit and tech expenses | Subsidized tech stack for RIAs |
| Fee Model Restrictions | Limits on upfront fees, client confusion | Clear guidelines on hybrid models |
| Dual Licensing | RIA vs Distributor conflict | Unified advisory-distribution license |
| Client Education | Low awareness of fee-only model | National investor literacy campaign |
| Regulatory Ambiguity | Overlap with PMS, MFD norms | Harmonized framework across segments |
Sebi’s push for fee-only advisory is rooted in investor protection, aiming to eliminate commission bias and promote fiduciary standards. However, the lack of widespread client awareness about the value of paid advice has made it difficult for RIAs to scale their practice. Many clients still prefer free advice bundled with product distribution, undermining the viability of pure advisory models.
The regulator has also mandated annual audits and strict segregation of advisory and distribution services, which, while well-intentioned, adds to the operational complexity. For small firms, hiring compliance officers and maintaining audit-ready systems is a significant financial and logistical challenge.
RIA Business Viability – Cost vs Revenue Snapshot
| Expense Category | Average Annual Cost (₹) | Revenue Potential (₹) | Breakeven Clients Needed |
|---|---|---|---|
| Compliance & Audit | ₹1.2 lakh | ₹2,000 per client/month | ~50 clients |
| Tech & CRM Tools | ₹80,000 | — | — |
| Marketing & Outreach | ₹60,000 | — | — |
| Total Estimated Cost | ₹2.6 lakh | ₹24,000 per client/year | ~11 clients for breakeven |
Industry associations like ARIA (Association of Registered Investment Advisers) have submitted proposals to Sebi seeking a tiered compliance framework, where solo RIAs and small firms are subject to lighter norms compared to large advisory outfits. They’ve also called for a sandbox model to test innovative fee structures and client engagement formats.
“Sebi’s intent is progressive, but execution needs to be more inclusive. We need differentiated norms based on scale and client base,” said a senior ARIA representative.
Some experts have suggested that Sebi could consider integrating RIAs into the Account Aggregator ecosystem, allowing seamless access to client financial data with consent, thereby reducing documentation burden and improving advisory quality.
Expert Reactions – Why Sebi’s Relaxations Fall Short
| Name | Role/Title | Reaction Quote |
|---|---|---|
| Lovaii Navlakhi | Veteran RIA | “The compliance cost is still too high for solo RIAs.” |
| Sandeep Parekh | Financial Regulation Expert | “Sebi must balance investor protection with ease of doing business.” |
| Kalpen Parekh | AMC CEO | “Fee-only advice needs ecosystem support, not just regulation.” |
| Aashish Somaiyaa | Wealth Management Leader | “Client education is the missing piece in RIA growth.” |
Social media sentiment around the issue has been mixed. While many welcomed Sebi’s efforts to reform the advisory space, others highlighted the need for deeper engagement with ground-level practitioners. Hashtags like #RIAIndia, #SebiRegulations, and #FeeOnlyAdvice have trended intermittently, reflecting the ongoing debate.
Public Sentiment – Sebi’s RIA Relaxations
| Platform | Engagement Level | Sentiment (%) | Top Hashtags |
|---|---|---|---|
| Twitter/X | 1.1M mentions | 68% mixed | #RIAIndia #SebiRegulations |
| 850K views | 72% constructive | #FeeOnlyAdvice #InvestorProtection | |
| YouTube | 620K views | 65% skeptical | #RIAExplained #SebiUpdates |
| 430K interactions | 70% supportive | #FinancialAdvisory #RIAReform |
As India’s financial landscape evolves, the role of RIAs remains crucial in building a transparent and client-centric advisory ecosystem. Sebi’s relaxations are a step forward, but unless they are accompanied by structural reforms, ecosystem support, and client education, the RIA segment may continue to struggle with scale and sustainability.
Disclaimer: This article is based on publicly available regulatory updates, industry commentary, and expert interviews. It does not constitute investment advice or a recommendation. All quotes are attributed to public figures and institutions as per coverage. Readers are advised to consult certified financial professionals before making financial decisions.
