Pursuant to SEBI (Investment Advisers) Regulations and AMFI guidelines, how must mutual fund distributors represent their professional status to clients?

[ A ]They can freely advertise themselves as 'SEBI-Registered Comprehensive Financial Planners' without holding an IA license.

[ B ]They must charge clients an upfront advisory fee of 2% in addition to receiving AMC trail commissions.

[ C ]They must clearly state that advice is incidental to distribution, display the tagline 'AMFI-registered Mutual Fund Distributor' (font size >= 12), and cannot use terms like 'Financial Adviser' or 'Wealth Manager' in their trade name.[ CORRECT ]

[ D ]They can simultaneously manage discretionary Portfolio Management Services (PMS) under their personal ARN.

Takeaway

Option C is correct: They must clearly state that advice is incidental to distribution, display the tagline 'AMFI-registered Mutual Fund Distributor' (font size >= 12), and cannot use terms like 'Financial Adviser' or 'Wealth Manager' in their trade name.

Derivation

Under SEBI (Investment Advisers) Regulations, 2013 and AMFI directives, mutual fund distributors (MFDs) provide advice that is purely incidental to their primary activity of fund distribution. MFDs are legally barred from using terms like 'Adviser', 'Financial Planner', 'Wealth Manager', or 'Consultant' in their trade names unless registered with SEBI as an Investment Adviser. Every MFD must prominently display the tagline 'AMFI-registered Mutual Fund Distributor' (font size >= 12) across all stationery, websites, and business cards. This tests regulatory naming restrictions. The common error is assuming MFDs can hold dual advisory/distribution roles simultaneously.

Why the others fail

A — They can freely advertise themselves as 'SEBI-Registered Comprehensive Financial Planners' without holding an IA license.

Using advisory titles without holding a formal SEBI Investment Adviser registration is a punishable regulatory violation.

B — They must charge clients an upfront advisory fee of 2% in addition to receiving AMC trail commissions.

MFDs earn trail commission from AMCs and cannot charge advisory fees; earning both advisory fees and distribution commission is prohibited.

D — They can simultaneously manage discretionary Portfolio Management Services (PMS) under their personal ARN.

Discretionary PMS management requires a separate SEBI Portfolio Manager registration and cannot be conducted under an ARN.