Investor Corner/The wider picture/Investor Protection
5.4.1 Registered Investment Adviser vs Distributor
A Registered Investment Adviser is paid directly by you for advice and carries a legal duty to act in your interest. A distributor is paid by the product provider and is, in a strict legal sense, selling rather than advising.
The distinction that actually matters
A Registered Investment Adviser, or RIA, is registered with SEBI specifically to provide investment advice, is paid a fee directly by the client, and operates under a fiduciary-style duty to act in the client's best interest. A distributor earns commission from the AMC whose products are sold, and is legally categorised as facilitating a sale rather than providing independent advice, regardless of how the interaction actually feels to the investor.
Why this is easy to miss in practice
Many distributors are knowledgeable, genuinely well-meaning, and give guidance that sounds exactly like advice. The legal and financial distinction is not about the quality of the interaction; it is about who is paying whom, and therefore whose interest is structurally aligned with the recommendation being made.
A simple question worth asking directly
Asking directly whether the person you are working with is a SEBI-registered investment adviser or a distributor earning commission is a reasonable, fair question, and the answer changes what weight to reasonably place on any specific product recommendation received.
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