Can an Investment Adviser Change the Fee Mode for a Client?
- August 17, 2026
- Posted by: Ankit Jaiswal
- Category: advisory
An investment advisory fee mode change from AUA to fixed or fixed to AUA requires documented client consent. SEBI does not allow advisers to unilaterally change fee mode. Investors should confirm t…
Quick Answer
An investment advisory fee mode change is the process through which the pricing arrangement between a SEBI-registered Investment Adviser and a client shifts from AUA-based to fixed-fee or from fixed-fee to AUA-based. An investment advisory fee mode change requires documented client consent and appropriate documentation — it is not a unilateral administrative decision by the adviser.
Investors who understand the process for an investment advisory fee mode change can evaluate whether a proposed change is in their interests, ensure the change is properly documented and verify that any billing adjustments for already-paid fees are handled correctly.
This guide explains when an investment advisory fee mode change can occur, what the client consent process should involve and what documentation investors should retain when a fee mode changes.
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When Fee Mode Changes Arise
An investment advisory fee mode change typically arises when: the investor’s portfolio has grown significantly, making an AUA-based fee disproportionately expensive relative to the service scope and making a switch to fixed fee advantageous, the investor’s portfolio has declined and the agreed fixed fee now represents a disproportionate percentage of a smaller portfolio, the adviser has updated their fee structure as part of a broader service offering revision or the investor has actively requested a fee mode assessment based on their changed portfolio circumstances.
Client Consent Requirements
Under SEBI IA regulations, an investment advisory fee mode change requires documented client consent before the change takes effect. The consent should clearly specify: the previous fee mode and rate, the new fee mode and rate, the effective date of the change and how any advance fees already paid under the previous mode are treated (credited, refunded or adjusted). An adviser who changes fee mode without obtaining documented client consent is not complying with the requirement that the client agreement govern the fee arrangement.
| Fee Mode Change Scenario | Documentation Required | Billing Adjustment |
|---|---|---|
| AUA to fixed fee | Client consent with new fixed amount and effective date | Assess remaining AUA period credit |
| Fixed fee to AUA | Client consent with AUA percentage and effective date | Assess remaining fixed period credit |
| Fee rate change within same mode | Client consent with new rate and effective date | Adjust prorated billing if mid-period |
What the Updated Agreement Should Contain
After an investment advisory fee mode change, the client agreement should be updated or supplemented with an addendum specifying the new fee arrangement. This update should include the new fee mode (AUA or fixed), the new rate or amount, the effective date of the change, how previously paid fees have been treated and the updated billing cycle. An investment advisory fee mode change that is communicated only informally without a written agreement update creates ambiguity about the fee terms that the original written agreement no longer accurately describes.
What Investors Should Verify
When a fee mode change is proposed, investors should verify: whether the proposed new fee is within the current SEBI maximum for their client category under the new mode, whether the proposed change is genuinely more cost-effective at their current portfolio size, how any advance fees paid under the previous mode are being handled and whether the new terms are being reflected in a written agreement addendum rather than just a verbal or informal communication. SEBI-registered platforms like Univest (SEBI RA Reg. No. INH000013776) publish their current terms and conditions on their official website; investors should review current terms if any changes are proposed. The investment advisory fee mode change framework discussed here applies throughout.
Review Current Advisory Fee Terms and Any Proposed Changes on the Univest Official Website The investment advisory fee mode change framework discussed here applies throughout.
Download the Univest iOS App or Univest Android App to understand your rights when an advisory fee mode change is proposed. The investment advisory fee mode change framework discussed here applies throughout.
Conclusion
An investment advisory fee mode change requires documented client consent before taking effect. SEBI does not permit advisers to change fee mode unilaterally. Investors should verify that the proposed new fee mode and rate are within SEBI’s current maximum for their client category, confirm how previously paid advance fees are being handled and ensure the change is reflected in a written agreement update or addendum rather than just informal communication. A fee mode change that benefits the adviser but not the investor requires careful evaluation before consent is given.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with official sources before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776). The investment advisory fee mode change framework discussed here applies throughout.
FAQs
Can an investment adviser change my fee mode without my consent?
Ans. No. Under SEBI IA regulations, an investment advisory fee mode change requires documented client consent before it takes effect. Advisers cannot unilaterally change fee mode. If an adviser proposes changing from AUA to fixed fee or vice versa, the investor must provide explicit written consent specifying the new mode, rate and effective date before the change applies.
What should be documented when a fee mode changes?
Ans. The documentation for an investment advisory fee mode change should include: the previous fee mode and rate, the new fee mode and rate, the effective date of the change, how any advance fees already paid under the previous mode are treated (credited, refunded or adjusted against the new mode calculation) and the revised billing cycle. This documentation should be reflected in an updated client agreement or a formal addendum to the existing agreement.
Can the fee rate change within the same fee mode?
Ans. Yes. An AUA percentage rate can change, or a fixed fee amount can be revised, within the same fee mode. Both types of rate changes within the same mode still require documented client consent before taking effect and should be reflected in an updated or supplemented client agreement. Mid-period rate changes should also address how the prorated billing for the current billing period is handled.
What should I check before consenting to a fee mode change?
Ans. Before consenting to an investment advisory fee mode change, verify: whether the proposed new fee is within the current SEBI maximum for your client category, whether the proposed mode is genuinely more cost-effective for your portfolio size, how previously paid advance fees are being handled and whether the change benefits you as the investor rather than primarily the adviser. Calculate your expected annual cost under the proposed new mode at your current portfolio size before agreeing.
What happens if I disagree with a proposed fee mode change?
Ans. If you disagree with a proposed fee mode change, the original agreed fee mode in your client agreement continues to apply until a revised arrangement is documented with your consent. You are not obligated to consent to a fee mode change proposed by the adviser. If the fee mode change is a precondition for the adviser continuing to provide services, this is a material change to the advisory relationship that may trigger your right to terminate the agreement under its applicable terms.
Does a fee mode change affect the SEBI-specified ceiling that applies?
Ans. The applicable SEBI maximum limits may vary by fee mode within the same client category. When changing from AUA to fixed fee or vice versa, verify whether the applicable SEBI ceiling under the new mode is the same or different from the ceiling under the previous mode. Both the percentage ceiling (for AUA) and the rupee ceiling (for fixed fee) must be verified at the time of the fee mode change against the current SEBI guidance applicable to your client category.
