INTRODUCTION
The wealth management industry in Nigeria has gradually transformed from an informal advisory practice into a structured and highly regulated segment of the financial services sector.
Many years ago, individuals providing financial advice often depended largely on personal relationships, offshore investment channels and informal asset management arrangements. As Nigeria’s capital market expanded and investors became more sophisticated, regulatory authorities introduced clearer rules governing how investment and wealth management services are delivered.
Today, entities that provide services such as investment advisory, portfolio management, financial planning, or fund administration must operate within a defined regulatory framework. This includes obtaining the necessary licenses, employing suitably qualified professionals and complying with operational and governance standards prescribed by law.
Several statutes now govern different aspects of the financial services industry, establishing rules for securities transactions, financial reporting, corporate governance and investor protection. Collectively, these laws provide the legal framework within which wealth management firms must conduct their activities.
At the centre of this regulatory structure is the Securities and Exchange Commission (SEC), which oversees and regulates entities involved in investment advisory services, portfolio management and fund management within Nigeria’s capital market.[1]
In today’s financial environment, the credibility of wealth management firms is no longer determined solely by investment performance. Increasingly, firms are assessed based on their commitment to regulatory compliance, transparency and sound governance practices. As a result, licensing and compliance have become essential indicators of professionalism and investor confidence.
[1] Securities and Exchange Commission; https://home.sec.gov.ng/about/our-role/who-we-are/
REGULATORY FRAMEWORK AND APPLICABLE LEGISLATION
Wealth management activities in Nigeria are governed by a combination of statutes and regulatory oversight by different agencies. While the Securities and Exchange Commission (SEC) remains the primary regulator of capital market activities, other regulators may exercise supervisory or regulatory roles depending on the nature of the financial services provided.
Key legislation relevant to wealth management operations in Nigeria include:
[2] Investment and Securities Act 2025.
When viewed collectively, these statutes promote market integrity, strengthen investor protection and enhance accountability across Nigeria’s financial system. Consequently, wealth management firms must carefully evaluate the scope of their services in order to determine the regulatory obligations applicable to their operations.
LICENSING AND REGISTRATION REQUIREMENTS
Obtaining the appropriate regulatory license is a fundamental requirement for operating within Nigeria’s financial services sector.
As a preliminary requirement, any wealth management firm intending to operate in Nigeria must be incorporated as a company with the Corporate Affairs Commission in accordance with the provisions of the Companies and Allied Matters Act 2020. The Act governs the formation and registration of companies, including requirements relating to share capital, corporate governance structures and statutory reporting obligations applicable to the prospective wealth management firm.
Section 61(1) of the Investment and Securities Act 2025, prohibits individuals or corporate entities from carrying on business in the Nigerian capital market as capital market operators unless they have been duly registered by the Securities and Exchange Commission (SEC).[3]
In this regard, SEC is responsible for determining whether applicants seeking to carry on business as wealth management company satisfy the prescribed requirements for registration. These requirements typically relate to professional competence, relevant experience, financial capacity, organisational structure and internal operational controls.
Consequently, firms which intend to provide services such as investment advisory, portfolio management, or fund management must obtain the appropriate Securities and Exchange Commission licence before commencing operations.
[3] Section 61(1) Investment and Securities Act 2025.
Where a firm’s activities extend to custodial services, trust services, or private banking, regulatory oversight may also fall within the supervisory purview of the Central Bank of Nigeria in line with the provisions of the Banks and Other Financial Institutions Act 2020.
Similarly, where wealth management services include insurance-linked investment products, regulatory approval may be required from the National Insurance Commission. Sections 6 and 7 of the National Insurance Commission Act confer powers on the Commission to regulate and supervise insurance business in Nigeria.
Operating in the capital market without the required regulatory authorisation constitutes a serious regulatory infraction. For Instance, under Section 61 of the Investment and Securities Act 2025, any person who carries on capital market activities without registration commits an offence and may, upon conviction, be liable to a fine of not less than ₦5,000,000.00 (five million Naira) or imprisonment for a term of not less than five years, or both[4]. Similar sanctions for operating regulated financial services without appropriate authorisation are also contained in other financial sector legislation, including the Banks and Other Financial Institutions Act 2020, which prohibits the conduct of banking or other financial institution business without a valid licence and prescribes fines and terms of imprisonment for violations.
IMPORTANCE OF LICENSING
Licensing serves purposes that extend beyond mere regulatory formality. It is crucial in maintaining investor confidence and market integrity.
Clients typically entrust wealth managers with significant financial decisions relating to asset preservation, investment growth and long-term financial planning. Regulatory licensing provides assurance that such firms meet minimum standards relating to professional competence, financial soundness and operational transparency.
Conversely, firms that operate without the appropriate regulatory authorisation risk significant consequences, including regulatory sanctions, reputational damage and potential criminal liability. In an industry where trust is essential, compliance with licensing requirements has become a key component of sustainable business operations.
[4] Section 61 Investment and Securities Act 2025.
is essential, compliance with licensing requirements has become a key component of sustainable business operations.
CONCLUSION
Licensing requirements help distinguish legitimate wealth management firms from unregulated market participants.
As regulators such as the Securities and Exchange Commission, Central Bank of Nigeria and National Insurance Commission continue to strengthen oversight of financial service providers, firms operating within the wealth management sector must ensure that their activities fall within the scope of the relevant regulatory approvals.
Babalakin &Co. is a Firm with a broad experience on the subject of Investment and Asset Management and all matters related to it. If you have any questions or would like information on the issues discussed, please contact:
Name: Ayomide Ifeoluwa Onimole
Email: ionimole@babalakinandco.com
Investment and Asset Management Practice Area
investments@babalakinandco.com
