Can an IA Show Prospective Clients Their Past Performance? — The Interim Rules Right Now
A prospective client asking "what kind of results have your existing clients seen?" is one of the most predictable questions an Investment Adviser will ever face. It's also one of the questions where answering naturally and answering compliantly are not automatically the same thing.
Why SEBI Restricts This At All
The underlying concern is one SEBI has stated repeatedly: past performance figures are easy to present selectively — a strong quarter shown without the weaker ones around it, a favourable benchmark chosen after the fact, an average that flatters a handful of good outcomes while obscuring a wider spread. Left unregulated, this is precisely the kind of presentation that misleads investors into overestimating what to expect going forward, which is exactly the harm SEBI's broader advertisement code and disclosure framework is built to prevent.
The Current Interim Position
Under the framework operating today, IAs face restrictions on referencing past performance data unless it meets specific conditions around methodology and disclosure — the details of exactly what's permitted have been in a state of active evolution, tied closely to the rollout of the PaRRVA verification framework covered in our companion article. Until an IA's performance data has been captured and verified through a recognised, standardised mechanism, the safer and more defensible position is to treat any past performance reference as carrying real compliance risk unless it is presented with full, unselective context and clear methodology disclosure, rather than as a simple marketing highlight.
What "Full Context" Actually Requires in Practice
Where past performance is referenced at all, the safer practice is to show the complete relevant period rather than a cherry-picked window, use a consistent and disclosed methodology for how the figures were calculated, include comparable benchmark data rather than presenting returns in isolation, and avoid extrapolating past figures into any statement or implication about future results.
Why "It's Just a Conversation, Not an Advertisement" Doesn't Provide Cover
A common and risky assumption is that verbal statements made during an in-person or phone conversation with a prospective client carry less regulatory weight than written marketing material. They don't. SEBI's framework doesn't distinguish between a performance claim made in a brochure and the same claim made verbally in a client pitch meeting — both are subject to the same underlying restriction, and both can form the basis of an investor complaint or a SEBI inquiry if the claim was misleading or unsubstantiated.
Where PaRRVA Changes This Calculus Going Forward
Once PaRRVA is fully operational and an IA's track record has actually been verified through a recognised PaRRVA Data Centre using the standardised methodology, referencing that specific, verified performance data is likely to carry considerably more latitude than an unverified, self-reported figure does today. Until that verification has actually occurred for a specific IA's specific data, however, treating self-reported past performance with real caution remains the prudent position.
Building an Internal Policy Rather Than Relying on Individual Judgment Calls
Given how easily a well-intentioned answer to a prospective client's natural question can drift into a compliance issue, IA practices are well served by a documented internal policy specifying exactly what can be said about past performance, in what format, and with what disclosures attached — reviewed by whoever holds compliance responsibility at the firm, rather than left to each relationship manager's individual discretion in the moment.
Reconciling This With Client Onboarding Documentation
This policy should sit alongside the firm's broader onboarding and disclosure documentation — the risk profiling process, the advisory agreement, and the Most Important Terms and Conditions document a client must receive — so the firm's approach to performance claims is consistent across every stage of the client relationship, not just the first conversation.
How We Help
We help Investment Advisers build the internal policy, documentation, and staff guidance needed to handle past-performance questions correctly and consistently — reducing the risk of an informal answer in a client meeting becoming a compliance finding later. If your practice wants this formalised properly, including readiness for how PaRRVA changes the picture going forward, our SEBI Intermediary Compliance practice can help you build it.
This article is for general informational purposes and reflects the regulatory position as understood at the time of writing, an area currently subject to active regulatory development. It does not constitute regulatory advice specific to any IA's circumstances — please consult our team and verify the current position directly with SEBI before referencing past performance to any client.