PMS onboarding process, step by step
The Disclosure Document comes before the agreement, and the client signs the fee annexure separately.
A PMS account is not opened with one form. The client receives the portfolio manager's Disclosure Document, completes KYC, opens a demat account in their own name, signs a written agreement with a separately signed fee annexure, acknowledges a short Most Important Terms and Conditions (MITC) document, and only then funds the account with at least ₹50 lakh in cash or securities.
The order matters, because SEBI ties each document to a point in the process. As the distributor you are the person who walks the client through it, so you need to know what comes before what, and what the client must sign personally.
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The onboarding sequence, step by step
- 1
1. Risk profiling and suitability
Before anything is signed, the client's objectives, horizon and risk appetite are assessed. The Investor Charter lists 'appropriate risk profiling of investors' as the first business activity, and the client fills the PM's risk questionnaire.
- 2
2. Disclosure Document, before the agreement
Regulation 22(3) requires the PM to give the client the Disclosure Document, with a chartered accountant's certificate in Form C, prior to entering into the agreement. The client should read fees, risks and past performance here first.
- 3
3. KYC, demat and bank verification
KYC is fetched from or uploaded to a KYC Registration Agency. A demat account is opened in the client's name and mapped to the PM's custodian. Money must come from the client's verified bank account and securities from their verified demat account.
- 4
4. Agreement and power of attorney
A written agreement setting out mutual rights and obligations is signed before the PM takes up management (Regulation 22(1)). For a discretionary account the client also signs a power of attorney so the PM can trade.
- 5
5. Fee annexure signed separately
The client signs the annexure on fees and charges separately and adds a note that they have understood the fee structure: handwritten on paper, or typed or written with a stylus in a digital journey (Master Circular 4.3.4). Clients onboarded on or after October 1, 2024 also get the link to the PM's fee calculation tool in advance.
- 6
6. MITC acknowledged
The client receives and acknowledges the MITC document, in the standard format APMI prescribes in consultation with SEBI (Master Circular 4.7A).
- 7
7. Funding
The first lump sum, in funds, securities or both, must be at least ₹50 lakh (Regulation 23(2); Master Circular 2.5), unless the client is an accredited investor and the exemption is disclosed and agreed.
Account-opening timelines in the Investor Charter
SEBI's Investor Charter for PMS (Master Circular Annexure 4B) sets these service timelines, counted in clear working days from receipt of all documents:
| Client type | PMS account (with demat) opened within |
|---|---|
| Resident individual | 7 days |
| Non-individual (company, trust, firm, HUF) | 14 days |
| Non-resident (with demat, bank and trading accounts) | 14 days |
| Copy of the signed agreement, on request | 3 days |
| Custodian name and demat number intimated | 3 days after account opening |
Joint holders and nominees
- Joint account
- Individuals can hold a PMS account jointly. SEBI's reporting format records the holding as single, joint, anyone or survivor, or first or survivor. Every holder completes KYC with PAN.
- Funding a joint account
- APMI's digital onboarding SOP requires the bank account to be in the name of one of the holders; money from an unregistered bank account is not accepted.
- Nominee
- Nomination is registered with account opening, so the Investor Charter gives it the same timeline. A nominee cannot be one of the account holders.
Free account, this exam preselected.
Digital onboarding has limits
APMI's SOP lets a client fill and e-sign the demat form, risk questionnaire, agreement, power of attorney and MITC in one online journey. It currently covers resident individuals, singly or jointly, whose Aadhaar and PAN are linked. An NRI client in Dubai still goes through the paper route.
How XXI-A tests this
Expect sequencing questions: which document must reach the client before the agreement is signed (the Disclosure Document), what the client must sign separately (the fee annexure, with their own note), and what the MITC needs (the client's acknowledgement). Scenario questions put a couple in front of you with one holder's KYC incomplete; the answer is always that every holder completes KYC before the account opens.
The common trap is treating the MITC as a replacement for the agreement. It is an additional summary; the full agreement is still mandatory.
FAQs
What documents are needed to open a PMS account?expand_more
KYC documents with PAN, a demat account in the client's name, a verified bank account, the signed PMS agreement with its separately signed fee annexure, a power of attorney for discretionary accounts, and the acknowledged MITC. The client receives the Disclosure Document before signing.
How long does it take to open a PMS account?expand_more
SEBI's Investor Charter sets 7 working days for resident individuals and 14 for non-individuals and non-residents, counted from receipt of all required documents.
Can a PMS account be opened jointly?expand_more
Yes. Individuals can hold jointly, for example in anyone or survivor mode, and each holder must complete KYC.
Can I transfer existing shares instead of cash to open a PMS account?expand_more
Yes. The ₹50 lakh minimum can be met in funds or securities, transferred from the client's verified demat account. How securities are valued for the minimum is set out in the PM's documents.