Who Pays Your Adviser Shapes the Advice You Get
Most investors never ask how the person recommending their investments is paid. Yet it is one of the most important questions you can ask. In India, financial guidance usually comes from one of two very different models: a commission-based distributor, or a fee-only SEBI-registered Investment Adviser.
A distributor is paid by the product provider — through commissions built into the product you buy. A fee-only Investment Adviser is paid only by you, and under the SEBI (Investment Advisers) Regulations, 2013 cannot earn distribution commissions from the clients they advise. Neither model is illegal, but they create very different incentives.
"When you pay for advice directly, the advice has only one job — to serve your goals."
- Murali Krishna Sivvala
Direct Plans vs Regular Plans
Since January 2013, every mutual fund scheme in India has offered a Direct plan alongside its Regular plan. Both invest in exactly the same portfolio. The only difference is that the Regular plan includes a distributor commission in its expense ratio, while the Direct plan does not — so the Direct plan costs less every year you stay invested.
A small yearly difference adds up over time. As a purely illustrative example: ₹10 lakh growing at 12% a year for 20 years becomes about ₹96.5 lakh, while the same amount growing at 11% becomes about ₹80.6 lakh — a gap of roughly ₹15.8 lakh from a one-percentage-point difference in annual return. These figures are hypothetical and are not a projection of any product's returns.
Questions to Ask Before You Take Advice
Are you SEBI-registered?
Ask for the registration number and verify it on the SEBI website. Registered advisers must display it.
How exactly are you paid?
Fees should be disclosed upfront in a signed agreement and paid only through banking channels — never in cash.
Did you profile my risk first?
Risk profiling and a suitability assessment are mandatory before an Investment Adviser gives advice.
Where do I go if I have a complaint?
A registered adviser must give you a grievance process, with escalation to SEBI SCORES and SMART ODR.
How Growsin Works
Growsin is a 100% fee-only SEBI-registered Investment Adviser (INA000021261) and Research Analyst (INH000023667). We are not associated with any broker, distributor or AMC, and we do not receive commissions or referral fees. Where you invest in mutual funds on our advice, we focus on cost-effective execution through Direct plans. Explore our services or read our full disclosures.
Disclaimer: This article is for educational purposes only and is not investment advice or a recommendation to buy or sell any security. Investments in securities markets are subject to market risks; read all related documents carefully before investing. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
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