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Before committing at least ₹50 lakh to a Portfolio Management Service (PMS), verify the provider’s SEBI registration, decide how much control you want over trades, read the disclosure document and client agreement, model every fee, and test performance claims against risk, benchmark and costs. Registration and past returns are screening evidence—not a recommendation or a guarantee.

Start with the current PMS minimum and your objective

SEBI’s investor guidance states that the minimum investment for PMS is ₹50 lakh. This is the current figure to use when planning an investment. An older SEBI FAQ referring to the 1993 rules mentions ₹5 lakh, but that historical amount should not be treated as today’s threshold. Regulatory minimums can change, so confirm the applicable rule before signing.

PMS is an individual portfolio-management arrangement: securities are held for you rather than pooled into a mutual-fund unit. Your first practical check is whether the service solves a defined problem—such as a particular equity strategy, delegated execution or a portfolio aligned with constraints that a standard fund does not meet. If you cannot state the objective, time horizon, acceptable loss and liquidity needs, you are not ready to compare providers.

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Write down your non-negotiables

  • Investment amount and whether the ₹50 lakh minimum leaves an adequate cash reserve.
  • Target horizon and circumstances in which you may need to withdraw.
  • Maximum tolerable drawdown, concentration limits and prohibited sectors or securities.
  • Whether you want the manager to make decisions, seek your approval or only provide advice.
  • Tax, custody, reporting and communication requirements.

Verify the exact legal entity with SEBI

Search SEBI’s public registered portfolio managers directory using the legal name that will appear on the agreement and bank or demat instructions. The directory displayed 538 registered portfolio-manager records and was marked “Registered intermediaries as on date Oct 07, 2026.” That count is a dated snapshot, not a quality ranking; it changes as registrations and statuses change.

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Match every identity detail

  • Legal entity name, registration number and current status.
  • Registered office and official communication channels.
  • Name of the contracting entity, not merely a group, app or strategy brand.
  • Authorized signatories and the entity receiving fees.

Ask the provider to identify where its registration appears in the directory, then check it independently. SEBI says it does not approve the services offered by individual portfolio managers. A registration confirms regulatory status; it does not certify suitability, competence, performance or solvency.

Choose the mandate that matches your control level

The labels discretionary, non-discretionary and advisory describe who decides and who executes. Ask the provider to map the label to the actual workflow in your proposed mandate.

Mandate Who proposes trades? Who approves the decision? Who executes? What to confirm in writing
Discretionary Manager Manager, within the agreed mandate Manager or its authorized broker/custodian process Permitted securities, concentration limits, risk limits, delegation and notification process
Non-discretionary Manager You As specified after your approval How recommendations are delivered, approval deadlines and what happens if you do not respond
Advisory Manager You You independently Advice scope, execution responsibility, conflict management and records of recommendations

Do not select discretionary simply because it appears convenient. It requires confidence in the process and in the limits written into the agreement. Non-discretionary and advisory arrangements require enough time and knowledge to review recommendations and execute decisions. A sales presentation cannot override the mandate you sign.

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Request the disclosure document before you sign

SEBI’s FAQ says the disclosure document is provided at least two days before entering the client agreement. Use that time to obtain answers in writing, not just an online presentation. SEBI also states that the document is neither approved nor disapproved by it and that SEBI does not certify its accuracy or adequacy.

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Check these disclosure sections

  • Fee amount, calculation method, payment timing and all taxes or pass-through costs.
  • Investment philosophy, permitted instruments, leverage or derivatives, turnover and concentration approach.
  • Specific portfolio risks, including market, liquidity, concentration and managerial risks.
  • Related-party transactions and arrangements with brokers, custodians or other service providers.
  • Reported performance and the method used to calculate it.
  • Audited financial statements for the preceding three years, as described in the FAQ.
  • Client-reporting format, frequency and delivery method.
  • Material conflicts of interest, disciplinary history or changes in control disclosed under the applicable rules.

The retrieved FAQ references older regulations. Confirm the current requirements in the latest SEBI regulations and master circulars before relying on a checklist copied from an older document.

Read the client agreement line by line

The agreement controls your relationship after the sales call ends. Compare it with the disclosure document and flag any inconsistency before signing.

Clauses that deserve a written answer

  1. Authority to trade: identify who can place orders, use brokers, participate in corporate actions and move cash or securities.
  2. Mandate limits: record asset classes, issuer or sector caps, minimum cash, derivatives permissions and any leverage restriction.
  3. Reporting: specify the report contents, frequency, delivery channel and the process for correcting an error.
  4. Termination: state notice periods, events allowing immediate termination and the documents needed to transfer holdings.
  5. Withdrawal: describe how cash or securities are requested, expected processing times and applicable charges.
  6. Conflicts and related parties: explain how trades are allocated and how related-party transactions are disclosed.

If a promise matters to your decision, it belongs in the signed documents. Verbal assurances about liquidity, risk limits or fees are difficult to enforce later.

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Compare total cost, not a headline percentage

SEBI’s FAQ says it has not prescribed a single fee scale in the guidance quoted there. Fees are agreed with the client and may be fixed, return-based or a combination. Obtain a rupee illustration for your likely portfolio size under several outcomes, including a loss, a modest gain and a strong gain.

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Cost category Questions to ask
Management or advisory fee Is it a percentage of committed, invested or average assets? Is it charged monthly, quarterly or annually?
Performance fee What return measure is used? Is there a hurdle, high-water mark, loss carry-forward or crystallization date?
Brokerage and transaction costs Are brokerage, exchange charges, stamp duty and other transaction expenses passed through at actual cost?
Custody and administration Which entity charges these amounts, and are they included in the quoted fee?
Taxes Which goods-and-services or other taxes apply, and are they shown separately?
Exit or transfer charges Is an early-exit fee charged, and does it vary by time held or withdrawal amount?

Ask for the same illustration from every provider. A lower management fee can still be more expensive if it is paired with a high performance fee, frequent turnover or large pass-through expenses. Check whether a return-based fee is calculated before or after other costs and whether losses must be recovered before a new performance fee is charged.

Test performance claims in context

Request strategy-level and client-relevant history with the exact period, benchmark, calculation method and costs. Compare like with like: the same dates, benchmark definition, cash treatment, portfolio mandate and fee basis. A headline return without this context cannot tell you whether the strategy compensated you for its risk.

Questions for the performance schedule

  • Is the record for the strategy, a model portfolio or actual client accounts?
  • What was the inception date, and how many full market cycles are represented?
  • Which benchmark is used, and why is it appropriate for the mandate?
  • Are figures gross or net of management fees, performance fees, brokerage, taxes and other expenses?
  • What were the maximum drawdown, losing periods, turnover and concentration levels?
  • How did the portfolio behave when the benchmark fell?

SEBI’s FAQ states that discretionary portfolio-manager performance is calculated using a weighted-average method across each investment category for the immediately preceding three years, with performance indicators also disclosed. Ask the provider to explain how that prescribed presentation relates to the specific strategy and portfolio you are considering.

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SEBI’s FAQ states: “Portfolio manager cannot offer/ promise indicative or guaranteed returns to clients.” Treat words such as assured, fixed, protected or guaranteed performance as a serious warning. Past performance describes history; it does not establish what your account will earn.

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Investigate portfolio and manager risk

SEBI identifies market, concentration, liquidity and managerial risks in PMS. Ask for a current or representative holdings breakdown, position-size limits and the circumstances in which those limits can be exceeded.

Concentration and liquidity checks

  • What is the largest permitted position and sector exposure?
  • Can the strategy hold thinly traded securities, unlisted instruments or derivatives?
  • How are valuation and exit decisions made when a security is difficult to sell?
  • Could several clients trying to withdraw at once affect execution?
  • What happens if the named portfolio manager leaves or the investment process changes?

Manager continuity matters, but so does process continuity. Ask whether investment decisions are documented, how research and compliance functions are separated, and how clients are notified of material changes.

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Confirm demat, custody and reporting arrangements

SEBI’s FAQ says investors in listed securities need a demat account in their own name. Confirm where your securities and cash are held, whose name appears on each account, and which parties can issue instructions. Be cautious if a provider asks you to transfer assets to an unrelated personal account or to make payments that do not match the contracting entity.

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Request a sample periodic report. SEBI describes reporting that includes holdings and values, transactions, benefits such as dividends, expenses and risks. Check the agreed frequency, delivery channel, valuation date and contact for resolving discrepancies. Reconcile reports with your demat and bank records rather than assuming a report is complete because it is branded.

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Understand withdrawal and early-exit terms

Funds or securities may be withdrawn before contract maturity, but the terms are agreed with the portfolio manager. An early-exit fee may apply. “No lock-in” therefore does not necessarily mean a cost-free or instant withdrawal.

Get the exit process in writing

  1. Ask whether you can request cash, securities in kind or both.
  2. Confirm the notice, forms, identity checks and expected settlement timeline.
  3. Ask how pending trades, corporate actions, unsettled transactions and taxes are handled.
  4. Obtain the exact fee formula for partial and complete withdrawals.
  5. Confirm how the mandate ends and when access to final statements is provided.

Match the arrangement to your emergency-fund needs. Money that may be required on short notice should not depend on an uncertain liquidation process.

Use a documented comparison scorecard

After collecting documents, score providers using identical evidence rather than persuasive meetings. Keep the source document and date beside every answer.

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Comparison axis Evidence to record
Regulatory identity Exact legal entity, SEBI registration and directory check date
Control Discretionary, non-discretionary or advisory workflow and mandate limits
Strategy Philosophy, instruments, concentration, turnover and manager continuity
Performance Comparable period, benchmark, calculation basis, drawdown and net costs
Total cost Rupee illustration covering recurring, performance, transaction, custody and exit charges
Operations Demat ownership, custody, reporting sample, reconciliation and service contacts
Liquidity Withdrawal steps, settlement expectations and early-exit charges

Reject any provider that will not supply enough information to complete the same scorecard. Do not compensate for missing evidence by giving extra weight to a strong return number or a polished presentation.

Red flags that should pause the decision

  • Guaranteed, assured or indicative returns presented as an investment promise.
  • Pressure to transfer ₹50 lakh or more before you receive the disclosure document and agreement.
  • A legal name or registration detail that does not match SEBI’s directory.
  • Performance shown without a benchmark, period, fee basis or drawdown.
  • Fees described only as “small,” “standard” or “success-based” without a rupee example.
  • Reluctance to explain custody, related-party transactions or manager departures.
  • Withdrawal terms that are absent, vague or inconsistent across documents.

Pause and seek independent professional advice when a clause is unclear, a conflict cannot be explained or the proposed risk exceeds your written limits.

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