Q.11 : I’m an individual RIA with no family members involved in distribution. In your compliance presentation you had mentioned that a ‘nil’ certification is recommended. My query is how do I get my auditor to sign of on this? What do I need to provide to him to prove this and what if the auditors of the family of IA are all different?

Response : The IA Guidelines mandate – the IA to get annual certificate from auditor confirming compliance with the client level segregation requirements as specified in Regulation 22.

Regulation 22 — in connection to Individual RIA talks about 2 important points. 

(1) An individual IA shall not provide distribution services.

You can prove this, by providing access to books of accounts especially revenue breakup and related records. If it is Nil, it is Nil.

(2) The family of an individual IA shall not provide distribution services to the client advised by the individual IA and no individual IA shall provide advice to a client who is receiving distribution services from other family members.

You can prove this, by following details:

Step-1. IA to provide the details in writing, of his family members.

Note: Family means Spouse, children and parents.

Step-2. IA also to provide, in above details, a column – stating their current occupation / business and another column to state categorically, whether that family member is providing distribution services.

Step-3. As per above details, If any of the family member is providing distribution services, then

1. a) Get the Client Master of such family member’s distribution services, for the financial year.

This client master has to be obtained by the auditor, from the family member who is providing such distribution services, in writing, of-course with the facilitation of IA.

1. b) Match IA’s client master with that of above.
2. c) If nothing matches, fine. Nil certificate can be given by auditor.

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