Questions to Ask Your Portfolio Management Services Provider

Most people who invest in Portfolio Management Services (PMS) for the first time do so after a conversation with a provider who made it sound compelling. The pitch is usually polished with good track records and seemingly reasonable fees. 

What is harder to evaluate in a one-hour meeting is whether this provider is genuinely the right fit for you: whether their processes are thought through, whether their incentives are aligned with yours, and whether you will actually know what is happening with your money once it is invested.

According to SEBI data, assets managed by portfolio managers grew from ₹10.45 lakh crore in March 2016 to ₹36.28 lakh crore by September 2024, more than tripling in under a decade. Even excluding institutional mandates such as the EPFO, the client-facing PMS segment stood at ₹7.43 lakh crore in September 2024, having grown over 30% in a single year. More providers have entered the market than ever before. That makes the choice harder, not easier

The list of questions below are not designed to intimidate your provider. They are designed to give you a clear picture of what you are actually signing up for, before you invest your hard-earned money.

Asking the right questions upfront is the only reliable way to separate a genuinely aligned manager from one who simply performs well in a pitch meeting. This guide covers the most important questions to ask your PMS provider before you invest your capital and why each question matters.

What to Ask Your New PMS Provider

1. What Returns Have You Delivered, and How Do You Calculate Them?

This is the first question anyone asks, and rightly so. But there is a common misconception that providers can present returns however they like. Under the SEBI (Portfolio Managers) Regulations, 2020, portfolio managers must report performance using the Time Weighted Rate of Return (TWRR) method, net of all fees and expenses.

Since April 2023, portfolio managers must also report investment approach-wise performance to the Association of Portfolio Managers in India (APMI) every month, and benchmark each investment approach against a benchmark prescribed by APMI.

What you should focus on, therefore, is not the calculation method but the context around the number. TWRR measures the manager's skill; Your personal returns for investments on an individual basis will be measured in XIRR which shall consider all your cashflows. A provider who has only operated through a bull market also looks very different from one who has navigated a full cycle.

Ask specifically:

• Which APMI-prescribed benchmark is this investment approach measured against, and how has it performed relative to that benchmark?
• How should I expect my own money-weighted return to differ from the reported TWRR?

Note: Past performance is not indicative of future returns. Use performance data as one input among many, not as the primary basis for your decision.

2. Will You Review My Existing Portfolio Before Recommending a Strategy?

A good PMS provider should want to understand where you are before telling you where to go. That means looking at what you already hold: your current investments, their tax basis, any concentration risks, and how they map against your financial needs.

Many providers skip this step. They have a set of strategies and they fit you into one. A provider who takes the time to conduct a thorough pre-investment review is not just being thorough, they are signalling that your portfolio will be built around your situation.

Ask specifically:

• Will you analyse my existing holdings before recommending a strategy?
• How do you factor in my current tax position when building the recommended allocation?
• Will the proposed portfolio differ meaningfully from your standard strategies, or is it largely the same for every client?

3. Who Makes the Final Call on My Investments?

When you invest in PMS, one of the first things to clarify is how decisions actually get made. SEBI recognises three categories of portfolio management: discretionary, non-discretionary, and advisory. For most investors, the choice is between the first two. In the discretionary, you hand over the mandate and the manager takes the calls and executes them too; in the non-discretionary model, the manager may recommend every move but waits for your approval before executing. 

Neither is inherently better, but they are fundamentally different products. Discretionary PMS means the provider owns the outcome. They cannot blame a bad trade on client hesitation. Non-discretionary PMS puts more control in your hands, but also more responsibility.

Most serious investors with limited time to monitor markets prefer discretionary management. What matters is that you know which one you are getting, and that it matches how involved you actually want to be.

4. How Will You Handle the Transition of My Existing Investments?

When you move capital into a PMS, you can bring in either funds or existing securities; SEBI permits both. In practice, most managers will realign or sell transferred holdings that do not fit their strategy, which means much of your existing portfolio may be sold during onboarding.

This is not a problem, but it does have real implications. Selling appreciated positions triggers capital gains tax, short-term or long-term depending on the holding period. The timing and sequencing of that realignment matters.

A provider who has a structured onboarding process will walk you through this before you commit. They will map out which positions you are holding, what the tax impact of selling looks like, and how to phase the transition in a way that does not create an unnecessary tax burden.

Ask specifically:

• What is the expected timeline from signing the agreement to being fully invested?
• How do you factor in the tax impact of liquidating my current holdings?
• Will you help me understand the full cost of transition before I make a decision?

5. What Is Your Investment Philosophy?

Every portfolio decision traces back to the fund manager's investment philosophy. It dictates how they respond to drawdowns, evaluate new opportunities, and define acceptable risk at any given time. This is not just a positioning statement.

Ask for specifics, not generalities. If a provider claims to be value-oriented, ask them to walk you through a past investment where they held an undervalued position through a period of significant volatility. Concrete examples reveal whether the philosophy is lived or merely marketed.

6. How Do You Build and Select the Portfolio?

PMS providers construct portfolios in very different ways. Some invest directly in stocks. Others invest through carefully selected mutual funds, using the PMS structure to build a customised, actively managed allocation across fund categories. The underlying instrument matters less than the rigour of the selection process and how well it aligns with your needs.

Ask specifically:

• Does the portfolio invest directly in stocks, through mutual funds, or a combination of both?
• Is the selection process driven by quantitative models, fundamental research, or a combination of both?
• Is there a formal investment committee, or does one individual make all final decisions?

7. How Will I Be Able to Track My Portfolio?

This is a question most first-time PMS investors forget to ask, and one they almost always wish they had. Knowing your money is invested is very different from seeing, at any point, exactly how each position is performing and what has changed since last month.

It helps to know the floor SEBI sets here. Under the SEBI (Portfolio Managers) Regulations, 2020, a portfolio manager must furnish a report to you at least once every three months, and as and when you ask for it. You also have the right to obtain details of your portfolio directly from the manager, and these reports are made available through restricted client login on the portfolio manager's website. So access to your statements is the baseline every registered provider must meet.

What varies is how far a provider goes beyond that baseline. Some meet the minimum with a quarterly statement. Others invest in technology that gives you more frequent, granular visibility through a digital platform, closer to real time. If you have limited time to track your investments, the ease with which you can see what is in your portfolio, and why, at any given moment is worth weighing when you choose a provider.

Ask whether reporting is quarterly or more frequent, whether you get transaction-level visibility, and how portfolio reviews are conducted.

8. Will I Have a Dedicated Person I Can Contact With Questions?

Once you are a client, questions will come up. A position moves sharply and you want to understand why. A market event happens and you want to know how your portfolio is positioned. You receive a report and one number does not make sense.

The quality of your experience as a PMS client depends significantly on how these moments are handled. Some providers at scale route client queries through a general helpdesk where whoever picks up the call has to look up your account. Others assign a dedicated relationship manager who knows your portfolio, understands your goals, and can give you a considered answer rather than a scripted one.

Ask who your point of contact will be after onboarding, whether that person is knowledgeable enough to actually explain investment decisions, and what the expected response time is for queries. The answer tells you a great deal about how the firm values the ongoing client relationship versus the initial sale.

9. How Concentrated Is Your Portfolio, and Why?

Most PMS providers use active management, since that is what justifies their fees and the personalised nature of the service. That said, within an actively managed portfolio, the degree of active risk taken varies enormously across managers. Some run concentrated, high-conviction books; others maintain broad diversification that functionally resembles an index.

Understanding where your manager sits on this spectrum matters for two reasons. First, it affects how you should read their benchmark comparison. SEBI requires every investment approach to be measured against an APMI-prescribed benchmark, but a concentrated, high-conviction portfolio will deviate from that benchmark far more sharply in both directions. Second, it determines the kind of volatility you will experience.

Ask your provider to show you, concretely, how their portfolio has behaved in both high-performing and flat market periods. A manager who can walk you through specific allocation decisions and their reasoning is one who actually owns the process.

10. What Fees Are Involved, and How Are They Structured?

SEBI's Portfolio Manager Regulations give providers considerable flexibility in fee design. As per SEBI regulations, a portfolio manager may charge a fixed fee, a performance-based fee, or a combination of both. Importantly, no performance or fixed fee can be charged upfron,, directly or indirectly, from clients.

Before signing any agreement, ask:

• If there is a fixed management fee, at what intervals is it charged and on what base: beginning NAV or average NAV?
• If there is a performance fee, what is the hurdle rate, the minimum return threshold beyond which the fee applies?
• Are there any transaction costs, custodian charges, or exit loads not mentioned?

For a detailed comparison of PMS cost structures versus mutual funds, see our guide on PMS vs Mutual Funds.

To Sum Up

Most investors spend considerable time evaluating a PMS provider's past returns. Returns matter, but they are a lagging signal. By the time you can see strong performance, many other investors already have. The questions that protect you are the ones that reveal how a manager thinks and operates before the next market cycle plays out.

A fund manager who can answer these questions with specifics, not generalities, is one who has thought seriously about the craft of managing money. The pitch meeting is easy to get right. These questions are harder to fake.

Choosing a PMS provider is not a one-time transaction. You will be in this relationship through bull markets and corrections, through years when the strategy works and years when it does not. The quality of that relationship depends heavily on the choices you make at the start. The 10 questions above give you the framework to do that well.

To start your search for a PMS provider with the right fundamentals in place, book a call with a Dezerv client financial partner today.

Frequently Asked Questions

1. What Questions Should I Ask a PMS Provider Before Investing?

Start with their track record (and how they calculate it), whether they will review your existing portfolio before onboarding you, whether the service is discretionary or non-discretionary, how they handle the transition of your current investments, and what your ongoing visibility into the portfolio will look like. The 13 questions above cover the most critical areas.

2. How Do I Choose a Good PMS in India?

Do not rely solely on recent return figures. Focus on whether the manager's investment philosophy aligns with your own outlook, how transparent they are about fees and process, whether they conduct a thorough pre-investment review, and how they have navigated different market environments. Past performance is not indicative of future returns, so an assessment made only on returns can be misleading.

3. Is PMS Better Than Mutual Funds?

PMS and mutual funds serve different investor profiles. PMS requires a minimum investment of ₹50 lakh as per SEBI regulations, offers a personalised portfolio, and gives investors direct ownership of underlying securities. Mutual funds are pooled vehicles suited to a wider range of investors. Whether PMS makes sense depends on your investible corpus, tax situation, and degree of customisation required.

4. What Is the Minimum Investment for PMS in India?

SEBI mandates a minimum investment of ₹50 lakh to participate in a Portfolio Management Services scheme in India. This threshold applies across all SEBI-registered portfolio managers. You can check the SEBI Portfolio Manager Regulations for the full regulatory provisions.

5. How Are PMS Fees Regulated in India?

Under SEBI's Portfolio Manager Regulations, PMS providers may charge a fixed fee, a performance-based fee, or a combination of both. The complete fee structure must be agreed upon in the client agreement before onboarding. Always ask for the all-in cost, including any custodian or transaction charges not captured in the management fee. Refer to the SEBI regulations for complete provisions.

Disclaimer - Dezerv Investments Private Limited is a Portfolio Manager with SEBI Registration no. INP000007377.

Distribution services are offered through Dezerv Distribution Services Private Limited, a wholly owned subsidiary of Dezerv Investments Private Limited (collectively referred to as “Dezerv”) vide AMFI Registration No. (ARN)- 248439 and APMI registration no. (APRN)- 00615.

Investment in the securities market is subject to market risks, read all the related documents carefully before investing. The information provided herein is intended solely for educational purposes. The past performance of the financial strategies, instruments and portfolios is not indicative of future performance. Such past performance may or may not be sustained in future. There is no assurance or guarantee that the objectives of the securities or instruments advised, or the portfolio managed by Portfolio Manager will be achieved. Any statements about future developments are speculative and should not be taken as guarantees. Readers are advised to consult with their financial advisor before making investment decisions based on the information provided herein. In the preparation of this document, Dezerv has used information developed in-house and publicly available information and other sources believed to be reliable. The information is not a complete disclosure of every material fact and terms and conditions. Any references to names of fund houses, investment securities, or asset classes are for illustrative purposes only. Dezerv, along with its directors, employees, or partners or any of its affiliates, shall not be held liable for any loss, damage, or liability arising from the use of this document. Additionally, all trademarks, logos, and brand names mentioned are the property of their respective owners and are used for identification purposes only. The use of these names, trademarks, and logos does not imply endorsement or recommendation.