Almost all state securities regulators require a firm registering as an investment advisor to also include at least one individual within such firm to serve as an IAR. In other words, a firm applying to become registered with its home state as an investment advisor must also have an IAR before it the firm’s investment advisor application will be approved by the state securities regulator.
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If my firm is registered with the SEC, do I need to personally register as an IAR?
November 02, 2018
Yes, associated persons of an SEC registered investment advisor firm that fall within the SEC and the applicable state’s definition of an IAR are required to register with the state securities regulator as such.
Does an individual have to be sponsored by an investment advisor in order to take the Series 65 examination?
November 02, 2018
No. Unlike an individual seeking to take the Series 7, a sponsoring investment advisor firm is not required for an individual to open a Series 65 exam window and take the Series 65 exam.
What are the qualifications to register as an IAR?
November 02, 2018
Most state securities regulators require that in order for an individual to become registered as an IAR, such individual must have successfully completed the Series 65 examination. In the event that an individual currently holds and maintains in good standing the Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Personal Financial Specialist (PFS) or Charter Financial Consultant (ChFC), most states will waive the successful completion of the Series 65. Similarly, as long as an individual maintains both a Series 7 and Series 66 with a broker-dealer, most states will not require such individuals to obtain the Series 65.
What’s an investment advisor representative?
November 02, 2018
An investment advisor representative (often referred to as an “IAR”) generally is defined by most states as a person who, for compensation (1) makes any recommendations regarding securities; (2) manages accounts of clients; (3) determines which recommendation or advice regarding securities should be given; (4) solicits or sells investment advisory services, or (5) supervises employees who perform any of the foregoing. Since the definition of an investment advisor representative, especially with respect to soliciting, can vary significantly from state to state, the rules of each particular state securities regulator should be consulted. If an individual meets the state’s definition of an investment advisor and maintains a place of business within a state or has a certain number of clients within the state, then most state securities regulators will require the individual to register as an investment advisor representative.
How does a state registered investment advisor firm determine in which states it should be registered?
November 02, 2018
Similar to an SEC registered investment advisor firm, a state registered investment advisor firm is required to register as an investment advisor with each state securities regulator where it maintains a place of business or where the firm has more than 5 investment advisory clients. (It should be noted that certain state securities regulators, such as the Texas State Securities Board, do not recognize this de minimus exemption and require investment advisor registration upon the first client.) State registered investment advisor firms must go through the entire investment advisor registration process similar to the process required by their home state’s securities regulator.
Does an SEC registered firm have to register with a state?
November 02, 2018
An SEC registered investment advisory firm does not have to register with state securities regulators. However, an SEC registered investment advisor firm is required to notice file with each state securities regulator where it maintains a place of business or if the investment advisor firm has more than 5 investment advisory clients. (It should be noted that certain state securities regulators, such as Texas State Securities Board, do not recognize this de minimus exemption and require notification upon the first investment advisory client.) In most states, an SEC registered investment advisor firm can notice file with a state securities regulator by electronically submitting the Form ADV Part I via the IARD system and paying the state securities regulator its notice filing fee.
Is the ADV Part 2 filed on-line?
November 02, 2018
All SEC and state registered investment advisor firms must electronically upload the Form ADV Part 2A through the IARD system using the text-searchable Adobe Portable Document Format (”PDF”). The Form ADV Part 2 uploaded through the IARD system will be available for public viewing through the IAPD system. SEC registered investment advisor firms are not required to file Form ADV Part 2B, but state registered investment advisor firms must upload the Part 2Bs in addition to the 2A.
The Form ADV serves two primary functions; (1) it is the official governmental application form for investment advisor registration and (2) it serves as a disclosure brochure provided to investment advisory clients. An investment advisor is obligated to disclose material information to a client, and the Form ADV is a primary vehicle for an investment advisor to disclose the following information to clients and securities regulators: investment advisory services available to clients; the fees and costs associated with such investment advisory services; indirect compensation received from third-parties; the background of the investment advisor firm’s principals; affiliates of the investment advisor firm and outside business activities of the investment advisor firm, its principals, and supervised persons; potential conflicts of interest; and certain firm policies and procedures such as its Code of Ethics and proxy-voting policy.
How is an IARD/Web CRD account established?
November 02, 2018
In order for firms and individuals to register as investment advisors with the SEC and most states, an account with the Investment Adviser Registration Depository (“IARD”) and WebCRD must be established through the Entitlement Group of FINRA, the administrator of the IARD system on behalf of the SEC and states. Upon its approval, the FINRA Entitlement Group will provide your account identification information and CRD number. The IARD/WebCRD account allows your firm and you to file the Form ADV Part 1 and Form U4 to become an investment advisor and investment advisor representative and pay the registration fees charged by the appropriate securities regulators.
