Family of client

An Investment Adviser's duties do not stop with the person who signed the agreement. SEBI's rules define a client's family too. This makes sure duties like disclosure and suitability reach the people who depend on that client for money.

The definition covers a client's dependent spouse, dependent children and dependent parents. The word "dependent" matters here. It does not mean every relative. It means only those who rely on the client financially.

The regulation states it directly: "family of client" shall include individual client, dependent spouse, dependent children and dependent parents.

This definition feeds into how "assets under advice" and related obligations are measured and applied, since a plan built for a client typically has to account for the financial needs of these dependants too, not the client's finances viewed in isolation.

Mrs Sharma engages an Investment Adviser for her own Rs 25,00,000 portfolio. Her husband, who has no independent income and relies on her earnings, and her two minor children fall within the "family of client" definition as her dependants. Her adult sister, who is financially independent and lives separately, does not — she is Mrs Sharma's family in the ordinary sense, but not in the regulation's narrower sense.

Chapter 18 (Key Regulations), section 18.6.1 (Definitions), states this definition immediately before "family of an individual investment adviser," which the paper often tests as a pair. Expect a question distinguishing the two definitions, or one testing the word "dependent" as the qualifying condition.

• Only dependent spouse, dependent children and dependent parents count — an independent adult relative, even a parent who is not financially dependent, falls outside this definition.
• Do not confuse this with family of an individual investment adviser — one describes the client's dependants, the other describes the adviser's own spouse, children and parents.