SEBI's 15 Mandatory Clauses for RIA Agreements Explained Simply

In early 2025, SEBI took an important step for investors: it standardised what must go into every investment advisory agreement.

Instead of each RIA drafting its own language from scratch, SEBI published a list of Most Important Terms and Conditions (MITC) 15 key points that have to be covered in every client agreement.

Here is what each of those clauses means for you, in plain English.

This is Part 2 of a 3-part series on SEBI RIA agreements. Start with Part 1: Why a SEBI RIA Agreement Is Non-Negotiable.

The agreement must make it clear that the advisor will never accept funds or securities from you for investment. They can only charge fees into their own account. All investments happen from your own bank and demat accounts.

If anyone asks you to transfer money to their personal or business account "for investing", that is a violation of SEBI norms.

The agreement must state that returns are not guaranteed. All investments carry market risk. If you see words like "assured returns", "guaranteed profits", or "capital protection" on market-linked instruments in the agreement, treat it as a major red flag.

SEBI explicitly bans schemes that promise fixed or assured returns from market-linked products. The agreement must acknowledge this. If your advisor runs any such scheme, they are operating outside the regulations.

The agreement clarifies that SEBI's jurisdiction covers only securities markets. Advice on products like traditional insurance, real estate, or loans falls outside SEBI's grievance framework and must be treated separately.

Your advisor cannot execute transactions on your behalf on a blanket basis. Every transaction requires your explicit consent often through your own login, OTP, or recorded instruction.

Never share passwords or OTPs. No SEBI-compliant RIA will ever ask for them.

The agreement must clearly state:

• Whether fees are fixed or AUA-based
• The exact amounts or percentages
• That they comply with SEBI caps for regular clients

For non-accredited individuals, those caps are:

• Fixed fee: up to ₹1.51 lakh per family per year
• AUA-based: up to 2.5% of assets under advice per year

For accredited investors, these caps do not apply and fees are negotiated freely. Read more: What Is a SEBI Accredited Investor?

The agreement must specify:

• Advance fees cannot exceed two quarters (6 months)
• If you terminate early, you are entitled to a proportionate

refund for the unexpired period

• The advisor may retain a breakage fee of up to one quarter

If there is no mention of refunds or advance fee limits, the agreement needs updating.

The advisor must take fees only through traceable modes bank transfer, UPI, cheque, or SEBI's centralised fee collection system.

Cash payments are not allowed.

You commit to providing true and complete information about your income, liabilities, existing investments, and risk tolerance. If you hide information, it weakens the suitability of advice and shifts responsibility for outcomes.

Before recommending anything, the advisor must assess your risk profile and communicate it in writing. You should receive a copy of your risk profile and be able to understand how it links to the portfolio strategy.

The agreement must disclose any actual or potential conflicts for example, if the advisor or a group entity also distributes mutual funds or insurance products.

It should also describe how such conflicts will be managed, not just acknowledged.

Every agreement must include a clear escalation path:

1. Contact the advisor's internal grievance officer 2. If unresolved, lodge a complaint on SEBI SCORES 3. If still unresolved, use SMART ODR for online dispute resolution

These are regulatory rights, not marketing bullets.

The agreement must explicitly state that SEBI registration does not guarantee returns or prevent losses. It only confirms the advisor is authorised and subject to regulation.

You can verify PI DELTA's registration on our SEBI disclosures page.

You agree to keep your email, phone number, and address updated with the advisor. This ensures you receive all communications, notices, and disclosures on time.

Finally, the agreement reminds you never to share login details, passwords, or OTPs for your bank, demat, or trading accounts with the advisor.

If anyone asks for them, you are not dealing with a SEBI-compliant adviser.

Next in this series: Before You Sign: A Checklist and 9 Red Flags

At PI DELTA, our client agreement incorporates all SEBI MITC requirements in clear, plain language no buried clauses, no fine-print surprises. If you'd like to walk through the agreement before signing up, schedule a 20-minute clarity call.

Prakhar Soni, CFA | CIPM | FRM | Founder, Pi Delta