India's Fee-Only Financial Advisers Are a Rare Breed. Here's Why It Matters

When an Indian investor needs help with money, they face a confusing choice: a commission-paid mutual fund distributor or a fee-only registered investment adviser (RIA). The second option is vanishingly rare. As of August 2026, only 1,039 RIAs held valid licenses in India, compared with 341,000 mutual fund distributors. This scarcity isn't an accident. It's the result of heavy regulation, high costs, and a fee-collection system that makes independent advice a tough business to run.

What's the difference between a distributor and an adviser in India?

A mutual fund distributor (MFD) earns commissions from fund houses for selling products. A fee-only RIA charges clients directly for advice and takes no commission. The two roles are regulated differently under India's Securities and Exchange Board of India (Sebi) rules, and the boundary between them is a source of constant friction.

Nikhil Kamat, 46, spent two decades at DSP Mutual Fund before turning down a head-of-sales role to launch Whyte Services LLP in July 2026. His firm is a distributor focused on retail investors, including those with modest sums. Himanshu Pandya, 47, took the opposite path. After losing his job at Franklin Templeton in 2020, he started HP Private Wealth as a fee-only RIA in November 2022. He now manages roughly 110 client accounts with assets under advice nearing Rs. 500 crore.

Why are registered investment advisers so rare in India?

The 2013 Sebi regulations opened the door for RIAs, but a 2020 amendment slammed it shut for many. The net worth requirement for individual advisers jumped fivefold to Rs. 5 lakh. Qualification norms stiffened to a postgraduate degree plus five years' experience. Regulation 22 forced strict segregation between advisory and distribution within the same group. Individual advisers were capped at 150 clients, beyond which they had to corporatise. Fees were capped at 2.5% of assets under advice annually or Rs. 1.25 lakh per client.

These rules weeded out casual players but triggered what several advisers called a surrender wave. Years saw more individual RIAs hand back licenses than new ones register. Sebi has since eased some rules, dropping the work-experience requirement and replacing net worth with a graded deposit. But the cost of running a compliant practice remains steep.

What does it cost to run an RIA practice in India?

Aryan Singhal, 28, a Chartered Financial Analyst in Delhi NCR, started his RIA practice in late 2024. Setup cost him between Rs. 30,000 and Rs. 55,000, plus a Rs. 1 lakh deposit. Annual compliance, office space, and website costs run roughly Rs. 4.2 to 4.8 lakh before client acquisition. Add the new disability-accessibility audit mandate at Rs. 30,000 to Rs. 50,000 a year, and the burden climbs further.

Singhal calculates that at the industry's average fee of 0.75%, a practice needs Rs. 6 to 7 crore in assets under advice just to break even on direct costs. Counting the salary he gave up, the real number is closer to Rs. 26 to 27 crore. That forces RIAs to chase wealthy clients and leaves smaller investors underserved.

Why is collecting fees so hard for Indian advisers?

India isn't used to paying for financial advice directly. Sajjan Kumar, a Bengaluru-based RIA, notes that a client with a Rs. 4 to 5 crore portfolio might quietly pay 0.75% to 1% in embedded commissions to a distributor, roughly Rs. 3 to 5 lakh a year. The same client balks at writing a cheque for Rs. 25,000 to an RIA. After seven years as a fee-only adviser, Kumar plans to add a distribution arm to make ends meet.

Pandya disagrees with the premise. He says clients pay when asked properly.

No client has ever dishonoured my invoice,

he says. But Vikrant Gupta, a partner at Apricus Wealth Investment Managers, says clients delay payments during flat markets while office bills keep running. He wants Sebi to allow RIAs to deduct fees directly from client accounts, similar to how distributors are paid.

What's the dispute over incidental advice?

Regulation 4(d) of the Sebi Investment Advisers Regulations exempts mutual fund distributors from RIA registration for advice that is incidental to distribution. The entire dispute is about how far incidental stretches. The Association of Mutual Funds in India (Amfi) bars distributors from offering holistic financial planning but permits goal-based advice on SIPs or lump-sum investments for specific goals like a child's education.

RIAs argue this opens the door for distributors to do what RIAs do, with far less compliance. Vivek Rege, founder of VR Wealth Advisers, calls it a pharmacist standing in a corner with a stethoscope.

Asking questions like 'after how many days do you need this money' and 'what for' is diagnosis, not dispensing,

he says. The Association of Registered Investment Advisers (ARIA) has flagged distributor websites that blur the line, and Sebi has formed a working group to re-examine the role of MFDs.

What's next for the RIA profession in India?

Sebi has proposed a new MF-PMS license that would let advisers manage client money in direct mutual fund plans and ETFs. The minimum investment drops to Rs. 25 lakh from Rs. 50 lakh, and net worth requirements fall to Rs. 2 crore from Rs. 5 crore. Fees would be embedded in the product, solving the collection headache. The adviser would also gain execution rights, not just recommendation rights.

ARIA has proposed allowing advisers to auto-redeem units from a client's liquid fund to settle fees. The group also hopes Sebi will tighten the definition of incidental advice. For now, the profession remains a tough one. As Gupta puts it:

Barriers to entry have reduced, barriers to scale have not.

Frequently asked questions about India's RIA shortage

How many RIAs are there in India?

As of August 26, 2026, Sebi's website listed 1,039 valid RIA licenses. BSE, the supervisory body, recorded 977 RIAs as of March-end 2026, of which 450 were individuals.

Why do investors need a fee-only adviser?

Fee-only advisers charge clients directly and take no commissions, removing the conflict of interest inherent in product sales. They can offer holistic financial planning without steering clients toward specific funds.

What did the 2020 Sebi amendment change?

The amendment raised net worth requirements, stiffened qualification norms, capped fees, and forced segregation between advisory and distribution. It also imposed a 150-client ceiling on individual advisers, later raised to 300.

Will the RIA profession grow in India?

Sebi has eased entry requirements and proposed the MF-PMS license to help advisers scale. But fee collection remains a challenge, and the profession still struggles to serve smaller investors profitably.

This article was adapted from a report originally published by the Economic Times.