SEBI Considers Permitting Mutual Fund Distributors to Hold Investment Adviser Licences — October 9, 2026

The Securities and Exchange Board of India (SEBI) is weighing a proposal to allow individual mutual fund distributors (MFDs) to secure registered investment adviser (RIA) licences. The initiative, being discussed by a regulatory working group set up earlier this year, seeks to streamline operational boundaries and harmonize regulations governing product distribution and fee-based investment advice.

Under existing regulations, corporate and non-individual entities can run segregated arms for distribution and investment advice, but individual professionals face strict separation. Individual RIAs are barred from distributing financial products or earning commissions from asset management companies (AMCs), while individual MFDs are limited to earning trail commissions and providing only "incidental" advice. Allowing individual MFDs to hold dual licences would place them on an equal operational footing with institutional advisory firms.

Addressing the Scarcity of Registered Advisers

The review comes amid growing regulatory concern over the stark imbalance between the number of distributors and registered advisers in India.

Key landscape figures:

• India has roughly 1,000 registered investment advisers, consisting of around 470 individuals and 530 non-individual entities.
• In contrast, there are nearly 3 lakh mutual fund distributors servicing an investor base of around 5 crore to 6 crore individuals.
• Regulators have noted that the shortage of certified advisers has left a void in Tier-2 and Tier-3 markets, often allowing unregulated "finfluencers" and social media tips to sway retail participants.

With mutual fund equity inflows and systematic investment plans (SIPs) breaking records month after month, SEBI has increasingly prioritized widening access to formal fiduciary guidance.

Conflict of Interest and Compliance Guardrails

While the potential reform could significantly expand the pool of certified financial planners across India, it also reopens debates surrounding conflicts of interest. SEBI strictly separated the functions of advice and distribution to ensure that planners act in a fiduciary capacity without being incentivised by distributor trail commissions.

The working group is examining mechanisms to ensure that any dual-licensing or harmonised model maintains strict client-level segregation. Under such frameworks, an intermediary would likely be prohibited from charging an advisory fee and simultaneously earning distribution commissions from the same investor.

Any formal change will require SEBI to issue a consultation paper for public feedback before amendments to the SEBI (Investment Advisers) Regulations are placed before its board. If cleared, the reform could represent the most significant structural overhaul of India's retail wealth advisory framework in over a decade.

Tags: SEBI Mutual Funds Registered Investment Advisers AMFI Wealth Management