Most Important Terms and Conditions (MITC) for Investment Advisers – A Complete Guide

Investment advisory services are essential for guiding individuals and businesses toward informed financial decisions. However, to protect investors and maintain transparency, the Securities and Exchange Board of India (SEBI) has mandated that all Investment Advisers (IAs) disclose the Most Important Terms and Conditions (MITC) as part of their agreements.

What is MITC (Most Important Terms and Conditions)?

MITC is a mandatory disclosure that every SEBI-registered Investment Adviser (IA) must include in their agreement with clients.
It outlines fee structures, advisory limitations, refund policies, grievance redressal, and risk profiling requirements.
MITC aims to enhance investor awareness and ensure that Investment Advisers operate transparently.

These terms provide legal clarity for both clients and advisers, ensuring that investors understand the nature of advisory services before engaging.

Key Most Important Terms and Conditions (MITC) for Investment Advisers

1. Fee Structure & Payment Rules

Investment Advisers cannot accept funds or securities in their accounts on behalf of clients.
Advisers must only charge fees as per SEBI regulations.
Clients must pay advisory fees through authorized channels like bank transfers, cheques, or UPI. Cash payments are strictly prohibited.

Current SEBI Fee Limits:

Investment Advisers cannot change the fee mode without the client’s consent.

2. No Guarantee on Investment Returns

Investment Advisers cannot promise or guarantee any fixed, assured, or guaranteed returns.
All investments carry risk, and IAs must disclose the potential risks to clients.
Advisers must provide recommendations based on proper risk assessment but cannot guarantee profits.

Important: If any adviser claims guaranteed returns, they violate SEBI regulations.

3. Investment Products & SEBI’s Role

SEBI regulates only securities-related advisory services.
Advisers must clearly inform clients when they provide services outside SEBI’s jurisdiction, such as:

• Insurance
• Real estate
• Commodities
  Clients must sign a separate declaration acknowledging that SEBI does not regulate such products.

4. Trade Execution & Control Over Transactions

Investment Advisers cannot execute trades on behalf of clients without explicit consent.
The client must individually approve each transaction before execution.
Advisers are strictly prohibited from requesting trading account login credentials, passwords, or OTPs.

Warning: If an adviser asks for your demat account login credentials or OTP, it is a serious violation.

5. Refund Policy & Prepayment of Fees

If clients terminate advisory services early, they are eligible for a refund for the unused period.
Advisers can charge a breakage fee, but it cannot exceed one-quarter of the annual fee.
Clients cannot be charged for more than two quarters in advance.

6. Risk Profiling & Suitability Analysis

Before offering services, Investment Advisers must:

• Conduct risk profiling of the client.
• Analyze the client’s income, assets, liabilities, and financial goals.
• Ensure that investment advice matches the risk level of the client.
  Advisers must update risk profiles regularly and notify clients of any changes.

7. Conflict of Interest Management

Investment Advisers must always act in the client’s best interest.
They cannot offer distribution services (like mutual funds with commission) to their advisory clients.
Advisers must recommend direct plans of mutual funds to avoid conflicts of interest.

If an adviser pushes a high-commission product without full disclosure, it is a red flag!

8. Grievance Redressal Process

If clients have any complaints against an adviser, they must follow these steps:

Step 1: Contact the Investment Adviser directly using the contact details provided in the agreement.
Step 2: If the issue remains unresolved, lodge a complaint on SEBI’s SCORES platform at www.scores.sebi.gov.in.
Step 3: If still dissatisfied, opt for Online Dispute Resolution (ODR) via SEBI’s Smart ODR portal at https://smartodr.in.

SEBI registration or certification does not guarantee performance—it only ensures regulatory compliance.

Why MITC is Important for Investors?

Transparency: Ensures clients fully understand the terms before signing up.
Protection from fraud: Stops misleading investment claims and prevents unauthorized activities.
Clear cost structure: Helps investors know how much they will be charged and under what conditions.
Regulatory oversight: Clients get SEBI-backed grievance redressal mechanisms in case of disputes.

Always read the MITC before signing an investment advisory agreement!

Final Thoughts – Stay Informed & Invest Wisely

MITC ensures transparency, investor protection, and fair advisory practices. Before engaging with any Investment Adviser, make sure to read and understand the terms in detail. Investment decisions should always be based on knowledge, risk assessment, and professional guidance.

Need expert financial advisory services? Contact Estabizz Fintech Private Limited for trusted investment solutions.

Get in touch today!

FAQs on MITC for Investment Advisers

The Most Important Terms and Conditions (MITC) for Investment Advisers outline the responsibilities, rights, and obligations of both investment advisers and their clients under SEBI regulations. Below is a detailed list of 50 FAQs, addressing key aspects of MITC based on the shared document.

1. General FAQs on Investment Advisers and MITC

1. What is MITC for Investment Advisers?

MITC refers to the Most Important Terms and Conditions that Investment Advisers must disclose to their clients. It ensures transparency in advisory services, covering fee structure, execution rules, risk disclosure, and grievance redressal.

2. Who needs to comply with MITC?

All SEBI-registered Investment Advisers (IAs) must comply with MITC and incorporate it into their investment advisory agreements.

3. Why is MITC important for investors?

MITC helps investors understand:
Their rights and obligations as clients.
The fees they will pay and services they will receive.
The risks involved in investments.

4. Where can I find the MITC of my Investment Adviser?

Your IA must provide MITC as part of the advisory agreement, and you can request a copy anytime.

5. Can Investment Advisers modify MITC?

No, MITC follows a SEBI-approved format and cannot be changed by individual advisers.

2. Fees & Payment Related FAQs

6. How much can an Investment Adviser charge as fees?

SEBI allows two models:
Fixed Fee Model: ₹1,51,000 per annum per family.
AUA Model: 2.5% per annum of assets under advice (AUA) per family.

7. Can an IA charge fees in advance?

Yes, but only for two quarters (6 months) in advance.

8. What happens if I terminate the service early?

You will receive a refund of unutilized fees, but the IA can deduct a breakage fee (maximum one-quarter of the annual fee).

9. What are the allowed payment methods?

Bank transfer, UPI, cheque
Cash payments are prohibited

10. Can an IA change the fee model?

Yes, but only with client consent and within SEBI’s fee limits.

3. Investment Advice & Trading Execution FAQs

11. Can an IA guarantee investment returns?

No, SEBI prohibits any form of guaranteed or assured returns.

12. Can an IA execute trades on my behalf?

No, IAs cannot execute trades without explicit client consent on every transaction.

13. Can an IA provide advice on insurance, real estate, or commodities?

Yes, but they must disclose that SEBI does not regulate such services.

14. Can an IA manage my Demat account?

No, IAs cannot hold securities or operate clients’ accounts.

15. Should I share my trading account details with my IA?

No, never share login credentials, OTPs, or passwords.

4. Risk Profiling & Suitability Analysis FAQs

16. What is risk profiling?

Risk profiling is an evaluation of the client’s financial situation, risk appetite, and investment goals.

17. Is risk profiling mandatory?

Yes, SEBI mandates risk profiling before any advisory service is provided.

18. Can an IA recommend high-risk investments beyond my profile?

No, investments must align with the client’s risk profile.

19. How often should risk profiling be updated?

Periodically or whenever the client’s financial situation changes.

20. Can I override my risk profile?

Yes, but you must acknowledge the higher risk in writing.

5. Conflict of Interest & Fair Practices FAQs

21. Can an IA sell mutual funds with commissions?

No, IAs must recommend only direct (non-commission-based) plans.

22. Can my IA also be a stockbroker?

Only if they disclose and separate advisory from broking services.

23. Can an IA receive referral fees?

Only if fully disclosed to the client.

24. How can I check if my IA is SEBI-registered?

Verify SEBI registration on official website

25. Can my IA be associated with multiple advisory firms?

Only if disclosed and compliant with SEBI’s conflict of interest policy.

6. Grievance Redressal & Complaint Resolution FAQs

26. How do I file a complaint against an IA?

Step 1: Contact the IA directly.
Step 2: If unresolved, file a complaint on SEBI’s SCORES platform 
Step 3: If still unresolved, escalate via SEBI’s Online Dispute Resolution (ODR) portal

27. What if my IA does not respond?

File a complaint on SEBI’s SCORES platform.

28. How long does it take to resolve complaints?

SEBI aims for timely resolution, but it varies based on complexity.

29. Can I take legal action against my IA?

Yes, you can seek legal recourse if misconduct occurs.

30. Are all IAs accountable to SEBI?

Yes, all SEBI-registered Investment Advisers are under SEBI’s jurisdiction.

7. Regulatory & Compliance FAQs

31. What certifications must an IA hold?

SEBI registration & NISM certification are mandatory.

32. How often do IAs renew SEBI registration?

Every 5 years.

33. Does SEBI regulate advisory services for all investments?

No, SEBI only regulates securities-related advisory services.

34. What are the penalties for non-compliance?

Fines, cancellation of registration, or legal action by SEBI.

35. Where can I check SEBI guidelines?

On SEBI’s official website

8. Client Responsibilities & Best Practices FAQs

36. Can I get a free trial of advisory services?

Yes, but it must comply with SEBI’s free trial regulations.

37. Can I change my IA if I am not satisfied?

Yes, clients can switch to another SEBI-registered IA.

38. Can an IA block my investment funds?

No, IAs have no authority to freeze client funds.

39. Should I keep records of my interactions with an IA?

Yes, always document conversations and agreements.

40. Is SEBI responsible for investment losses?

No, SEBI ensures compliance but does not guarantee returns.

These FAQs are designed to help investors understand their rights and responsibilities when dealing with Investment Advisers. If you need further assistance, consult SEBI’s official website or reach out to your IA for clarification.

Disclaimer – Estabizz Fintech Private Limited

The content of this blog is for educational and informational purposes only and does not constitute financial, legal, or investment advice. While we strive to provide accurate details, SEBI rules and investment advisory conditions are subject to change.

Clients should consult with certified financial professionals before making investment decisions. Estabizz Fintech Private Limited is not responsible for any losses or damages arising from reliance on this information.

For updated regulations, always refer to the official SEBI website.

Stay informed. Stay compliant. Contact Estabizz Fintech for expert financial advice!