If you are planning to register as an Investment Adviser or a Research Analyst, one point where you can possibly get stuck is the “BUSINESS PLAN”.
Of course, you have a business in mind but what you do not have is a ‘plan’ or a ‘written document’.
In my experience of helping applicants with application to SEBI, I have often come across this problem.
In fact, recently an applicant asked me, “What are details to be included in a Business Plan?”
Now, SEBI has not specified any format for the business plan. Nor has it mentioned anywhere about what information is to be provided in the business plan.
So, I take this upon myself to offer some points for you to draft a business plan for your investment advisory or research analyst application to SEBI.
A disclaimer is in order. This is by no means a comprehensive guide and there can be many more details that can be included in a plan.
Here are the key points to be included in your business plan.
#1 – Introduction
You may start by mentioning your experience or your entity’s history with respect to investment advisory.
#2 – Proposed activities
Mention a brief description of the activities you plan to carry on post registration with SEBI. Include details of the products and/or services you plan to offer to your clients. You can also add what clients need to do to avail your services.
#3 – Fees and charges
In case of RIAs, it is expected to mention fee and charges for the services offered to clients.
#4 – Mention your target audience
You can add the details of your target audience for your services.
#5 – Projected Profitability
This will probably need an excel spreadsheet and is likely the most important section. Mention the number of clients you are expecting to acquire and the projected revenue for the next three years.
#6 – Means to achieve the targets
What kind of promotion, sales or marketing activities do you plan to use to achieve your business goals?
E.g.: You will be using a website with free analysis and paid research or advertise via social media platforms, paid search or by advertisement in newspapers or magazines, etc.
#7 – Other activities and Future Plans
You can mention the other activities you plan to do after the license.
E.g.: You also plan to have a blog or teach investors about stock market or you plan to start Portfolio Management Services at a later date.
In case of application as an entity, you can also add if you plan to expand you business and open branches in various cities.
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Remember that you have to create a formal document of your business plan. In other words, take it out of your head onto a set of spreadsheets and word documents. You may add graphs and images wherever required.
As you would appreciate, SEBI intends to know your seriousness about your role as an IA or RA. A business plan is a good way to check how you are thinking.
Is that it?
The application for registration as Research Analyst and Investment Adviser is processed by the regional offices of SEBI.
So, as per your place of business, the officer at the nearest regional office is allocated your application. Even though you submit a detailed business plan, there are chances that you may be asked to submit additional information.
I hope the above points help you get a direction in drafting your own business plan for the SEBI application.
This article is just a guidance note for the business plan, based on my experience in dealing with SEBI. The points mentioned in the article are not approved by SEBI in the regulations. If you need professional assistance in making a business plan or making an entire application to SEBI as an Investment Adviser or a Research Analyst, you can write to me at kruti@cskruti.com.
All the best!