What to expect from your PMS provider?

A few weeks ago, a prospect walked into a conversation with our team, already frustrated. He’d invested ₹58 lakh with a PMS provider. Two years in, he’d never received a single quarterly report. When he asked for one, the firm sent him a WhatsApp screenshot of a spreadsheet.

He wasn’t sure if that was normal. So he asked us, “what is a PMS provider actually supposed to do?”

It’s a good question. The answer is more specific than most investors expect.

Start with the basics. Is the firm registered?

Every PMS provider in India must be registered with SEBI under the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020. The registration number is public. You can verify it on SEBI’s intermediary database at investor.sebi.gov.in/pms_final.html in minutes.

If someone is managing portfolios without this registration, they’re operating outside the law. Full stop. The minimum net worth for a PMS firm is ₹5 crore, verified by a practising CA. Registration has to be renewed every 3 years.

Also worth knowing, since January 2025, PMS distributors (the people who introduce you to the firm) must be separately registered with APMI, the Association of Portfolio Managers in India. If your distributor can’t show you an APMI registration, that’s a flag.

The ₹50 lakh minimum is regulatory requirement.

SEBI mandates a minimum investment of ₹50 lakh. Any firm accepting less is either pooling client money (which is illegal for PMS) or running something that isn’t actually a PMS. In both cases, you have a problem.

This threshold exists because PMS is designed for investors who can absorb the concentration risk that comes with individually managed stock or fund portfolios. It’s a suitability filter, built into the regulation itself.

What you should receive before investing a single rupee?

Before you sign anything, your PMS provider is required to give you a Disclosure Document. This isn’t a marketing brochure. It’s a regulated filing that must include: the firm’s investment approach, the risks involved, the complete fee structure, historical performance data, and details about the people managing your money.

Since October 2024, SEBI has added a specific requirement: the firm must provide a fee calculation tool. This lets you see exactly what you’d pay under different return scenarios over multiple years. Management fee, performance fee, hurdle rate, high-water mark, brokerage, custody charges. All of it, modelled for you before you commit.

If a provider can’t show you this tool, they’re behind on compliance.

Your assets, their account? That’s not how it works.

SEBI requires client assets to be held with an independent custodian, separate from the firm’s own funds. Your stocks sit in your demat account. Your money is in a segregated bank account. The PMS firm manages the portfolio; they don’t hold your wealth.

This is one of the structural protections most investors don’t think to verify. Ask who the custodian is. A reputable PMS will name them upfront.

Two promises no legitimate PMS provider will make.

SEBI explicitly bans guaranteed returns. If someone promises you 15% annually, or “assured” returns of any kind, that’s a regulatory violation and a red flag.

Upfront commissions to distributors are also banned. The person who introduced you to the PMS should be compensated through trail fees, not a lump sum paid out of your capital on day one.

Reporting, what you’re entitled to see.

Your PMS provider must send you a quarterly report rather than just a WhatsApp message. A structured report with your portfolio holdings, transactions, fees charged, and performance against the stated benchmark.

The firm also files monthly reports with SEBI. Additionally, every PMS is required to have a compliance officer who oversees regulatory adherence. If you ever feel something is wrong, SEBI’s SCORES portal (scores.gov.in) is the formal grievance mechanism. Complaints filed there are tracked and the provider is required to respond.

Back to the prospect

He did check the SEBI database. His provider was registered. But the firm had never shared a disclosure document, never provided a fee calculator, and had been sending performance updates as informal messages rather than structured quarterly reports.

The PMS provider was registered but wasn’t quite compliant. The registration is the floor. The reporting, the disclosures, the custodial separation, the fee transparency, now that’s where you see whether a firm actually operates like a regulated entity or just carries the certificate.

Before you invest, check every single one of these is verifiable.

Note: Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The indices quoted are for illustration only and are not recommendatory.
The views expressed here are the author’s own and do not necessarily reflect Scripbox’s official position. Investments are subject to market risks. Please read all related documents carefully before investing. Past performance is not indicative of future results. PMS Registration No. INP000001660.