Portfolio Management Services

High-Net-Worth Individuals (HNIs) looking for a more personal investment approach can consider Portfolio Management Services (PMS). These services are a great alternative to traditional products like mutual funds. PMS combines professional expertise, customized portfolio strategies, and transparency.

But before signing up, investors must carefully evaluate whether the PMS offering aligns with their goals. That’s where a PMS checklist comes in. This checklist serves as a roadmap helping you validate critical aspects like eligibility, minimum investment, taxation, and ongoing compliance.

In this article, we discuss 10 things to check before investing in PMS. This will help you manage your wealth with confidence.

1. PMS Eligibility

The first step is confirming whether you qualify to invest. SEBI guidelines specify that PMS is suitable for:

1. HNIs and Eligible Investors – Individuals, NRIs, or institutions.
2. Minimum Ticket Size – Investors must meet the mandated ₹50 lakh PMS minimum investment threshold.

If you do not meet the PMS eligibility rules, you should look into other wealth management options. These options include mutual funds or AIFs.

2. PMS Minimum Investment

As per SEBI regulations, the PMS minimum investment is ₹50 lakh, making it a product primarily designed for HNIs.

This higher entry barrier ensures that PMS portfolios remain customized, focused, and well-managed. They are for serious investors who can afford to take big risks. Before committing, assess whether allocating this capital suits your overall financial plan.

3. Portfolio Management Strategy

Not all PMS offerings are the same. Some focus on large-cap stability, while others lean into mid-cap growth or thematic strategies.

Your PMS checklist should include:

1. Investment philosophy of the manager
2. Track record of past performance
3. Risk-return profile
4. Alignment with your wealth goals

4. PMS Taxation

One of the most overlooked aspects of PMS is taxation. Unlike mutual funds, where taxation happens at the fund level, PMS taxation occurs at the investor’s individual level.

1. Capital Gains – Taxed based on the holding period (short-term vs. long-term).
2. Dividends – Taxable in the investor’s hands.
3. Tax Filing – Investors need to account for gains/losses in their ITR.

Including PMS taxation in your checklist ensures you plan ahead for compliance and efficient after-tax returns.

5. Fee Structure

PMS fees usually include:

1. Fixed Management Fee – Charged as a percentage of assets under management (AUM).
2. Performance Fee – Linked to returns above a specified hurdle rate.

Transparent understanding of costs is critical before you commit.

6. PMS Audit Checklist & Reporting

A reliable PMS must provide regular reports and disclosures. SEBI mandates PMS providers to maintain an audit checklist, ensuring compliance and transparency.

Your PMS provider should offer:

1. Quarterly performance reports
2. Portfolio holdings disclosure
3. Annual audit reports
4. Tax statements

This keeps you informed and helps in independent verification of performance.

7. Risk Management Practices

Every PMS strategy comes with risks. Your checklist should evaluate how the manager addresses:

1. Market volatility
2. Concentration risks
3. Liquidity management
4. Stop-loss mechanisms

Robust risk controls are as important as return generation.

8. Track Record and Credentials

Check the credentials of the PMS manager and the firm’s reputation. Look at:

1. SEBI registration details
2. Experience across market cycles
3. Historical consistency of returns

Past performance doesn’t guarantee future results, but it signals professional competence.

9. Operational Flexibility

A good PMS provider should allow flexibility in:

1. Mode of account opening (demat + bank account linkage)
2. Exit load terms
3. Switching between strategies
4. Adding additional capital after initial investment

This flexibility ensures your portfolio adapts to changing market or personal conditions.

10. Alignment with Your Wealth Goals

Finally, ensure the PMS aligns with your broader wealth management journey. Whether your focus is capital appreciation, capital preservation, or legacy planning, PMS should integrate seamlessly with your financial objectives.

Putting It All Together: The PMS Checklist

Here’s a quick recap of what to validate before investing:

1. PMS eligibility – Do you qualify under SEBI norms?
2. PMS minimum investment – Can you allocate ₹50 lakh or more?
3. Portfolio management strategy – Does it match your risk-return profile?
4. PMS taxation – Are you prepared for individual-level tax reporting?
5. Fee structure – Transparent costs (fixed + performance).
6. PMS audit checklist – Regular reporting and SEBI compliance.
7. Risk management – Defined framework for volatility and liquidity.
8. Track record & credentials – Manager’s experience and regulatory standing.
9. Operational flexibility – Options for exit, switches, and top-ups.
10. Alignment with wealth goals – Does PMS support your long-term strategy?

Conclusion

A PMS checklist is not just a formality, it is your safeguard. By checking things like eligibility, minimum investment, taxes, and audit needs, you protect your wealth. This helps you stay on track with your financial goals.

For HNIs, PMS offers a powerful balance between personalized wealth creation and professional portfolio management. But as with any sophisticated product, due diligence is the key to long-term success.

At FYERS Asset Management, we believe in empowering investors with clarity, transparency, and research-driven strategies. Use this checklist as your guide before picking a PMS provider. The right choice today builds a strong foundation for future wealth.