SEBI has implemented improvements to simplify and enhance the digital onboarding process for Portfolio Management Services (PMS) in India, effective October 2024.  This means clients will now electronically acknowledge their understanding of fee structures, which will be presented in a clear and comprehensive manner. This was previously done via handwritten confirmation. 

To further empower investor understanding, portfolio managers will be required to provide a fee calculation tool that showcases various fee options and their corresponding calculations over multiple years. This will incorporate the high-watermark principle, ensuring fees are only levied on actual profits earned.  For situations where performance fees are involved, the annexure will include illustrative examples considering different scenarios and potential portfolio value changes.

These changes extend beyond streamlining the onboarding process. To ensure investors are fully informed about the client-portfolio manager relationship, a Master Information and Transaction Checklist (MITC) will be provided. This will require portfolio managers to furnish all relevant fund information and keep clients updated. Existing clients can expect to receive this information via email or other suitable modes by January 1, 2025. 

Overall, these SEBI regulations aim to promote transparency, improve client protection, and expedite the PMS onboarding process. This translates to faster account activation (within 2-3 working days) compared to the previous 7-10 day wait time associated with physical onboarding.

Click here to understand more about this circular from SEBI.