Good Practices

1Approaching clients the right way

• AIFs may be offered only by private placement. No public advertising, mass mailing, social media campaigns or public invitations.
• Use only materials approved by the AIF (PPM, presentations, factsheets), and do not alter them.
• Approach only investors who may be eligible (meeting the minimum investment and any accreditation needed) and for whom the product may be suitable.
• Never use exaggerated or misleading claims, and never promise or guarantee returns.

Practise this concept (3 questions)

2Suitability and disclosure

• Before recommending an AIF, understand the client's wealth, income, liquidity needs, time horizon, risk appetite, experience and existing alternatives exposure.
• Explain the strategy, risks, lock-in, drawdown obligations, fees, carry and tax position, and make sure the client reads the PPM.
• Disclose your distribution fee (upfront and trail components) and that a direct plan is available.
• Disclose any conflict of interest, such as a relationship with the sponsor or manager, or higher commission from one fund than another.
• Recommend schemes for their merit and fit, never because of higher commission.

Practise this concept (4 questions)

3Documentation and records

• Record the suitability assessment, what was explained, and the client's acknowledgement of risks.
• Keep copies of documents provided and communications.
• Ensure application forms are complete and signed by the client. Never alter a client's form.
• Maintain confidentiality of client information.

Practise this concept (2 questions)

4Conduct rules

Do:

• hold the required NISM certification (XIX-A for Category I and II) and keep it current;
• have a written agreement with the AIF or its manager;
• keep your own and client money separate: clients pay the AIF directly;
• respond promptly to client queries and complaints, and escalate when needed.

Don't:

• offer rebates, gifts or inducements to win clients;
• churn clients between funds for commission;
• downplay the risks in the PPM;
• appoint sub-distributors without the AIF's approval;
• give legal or tax advice you are not qualified to give.

Practise this concept (5 questions)

5KYC and anti-money laundering

• The AIF is responsible for KYC, but distributors help collect documents, including FATCA/CRS declarations for tax residency.
• Watch for red flags: unexplained sources of money, reluctance to give information, third-party payments, or requests to bypass procedures. Report suspicious activity through the proper channels.
• Payments must come from the investor's own bank account.

Practise this concept (2 questions)

6Responsible investing and continuing learning

• Many investors want to know how funds handle ESG (environmental, social and governance) risks. Some managers follow responsible-investment frameworks such as the UN Principles for Responsible Investment (PRI).
• Rules change often: SEBI amends AIF rules frequently. Distributors should keep up to date through circulars, industry bodies and training, and renew their certification on time.

Remember

• Private placement only; approved materials; no promised returns.
• Suitability, full disclosure (fees, direct plan, conflicts), documentation.
• No rebates, no churning, no sub-distributors without approval.

Practise this concept (2 questions)