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SEC Investment Advisor Registration Requirements

SEC Investment Advisor Registration Requirements

While there are some exceptions, in general, investment advisors with $100 million or greater in regulatory assets under management (AUM) must register with the SEC as Registered Investment Adviser (RIA). Some of the common exceptions which allow an investment advisor with less than $100 million in AUM to register with the SEC instead of the relevant state(s) include:

  • An investment advisor with its principal office and place of business in New York will generally register with the SEC if it has $25 million or greater AUM
  • Advisors to investment companies registered under the Investment Company Act of 1940 must register with the SEC regardless of AUM
  • Advisors that would be required to be registered in 15 or more states will generally register with the SEC regardless of AUM
  • Internet-only advisors may register with the SEC regardless of AUM

It should also be noted that new registered investment advisors that believe they will meet the eligibility requirements to be registered with the SEC within the first 120 days from the initial registration approval date, may also file the initial RIA registration with the SEC.

The SEC staff has published a partial summary of the regulation of SEC-registered investment advisers in March 2013 which can be found at: www.sec.gov/about/offices/oia/oia_investman/rplaze-042012.pdf.

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SEC Investment Advisor Registration Process

Investment Advisor Representative (IAR) Registration Requirements (administered at the state level):

  • Licensing Requirements: Series 65, Series 66 and Series 7 combined, or CFP, CFA, CIC, ChFC, PFS.
  • Each investment advisor representative must submit the form U-4 and ADV Part 2B (optional) in the relevant state(s).

General Firm Registration Requirements

  • Payment of all SEC registration filing fees
  • FINRA Entitlement paperwork
    • In order to file a registered investment adviser application with the SEC, one must first apply to the Financial Industry Regulatory Authority (FINRA) for an account (Entitlement) to their WebCRD/IARD on-line system (the web application for the registration of RIA’s and their representatives). While RIA’s are in no way regulated or supervised by FINRA, the SEC uses FINRA’s WebCRD/IARD system to process applications.
  • Form ADV 1 (online)
    • The Form ADV Part 1 is the on-line component to your Firm’s registration documentation. Note: The Form ADV Part 1 primarily discloses information about the FIRM. Individual information is primarily disclosed in the Form U4 as detailed below. The Form ADV Part 1 is also the vehicle to upload your Firm’s Form ADV Part 2A (Firm Brochure) and Form ADV Part 2B’s (Brochure Supplements).
  • Form ADV 2A (paper and online)
    • The Form ADV Part 2A acts as your Firm’s Brochure. It is a narrative description of your services, fees, disciplinary disclosures, as well as several other Firm details. The Form ADV Part 2A must be provided to all Clients and Prospective Clients. The SEC requires that the ADV Form 2A be written in “plain English” and easily understood by your clients.
  • Form ADV 2B (paper and online)
    • The Form ADV 2B is the paper brochure that Investment Adviser Representatives must (in most cases) provide to clients. This form contains employment, educational, conflict of interest, and disciplinary information. Generally, Executive Officers, any person generating investment advice provided to clients, and any representative advising clients must have a Form ADV Part 2B.
  • Client Advisory Contract
    • Client Advisory Contract including an investment policy statement that meets the appropriate regulatory authority standards for client advisory contracts..
  • Policies and Procedures Manual
    • The firm’s Policies and Procedures manual is the guiding document that your firm will use to maintain and enforce your firm’s internal policies on all aspects of your business from the handling of client complaints to the training of new Investment Adviser Representatives. It also houses your firm’s Business Continuity Plan, Anti-money Laundering Policy, and Anti-insider Trading Policy.
  • Privacy Policy Statement
    • The Firm’s Privacy Policy Statement must be provided to all clients at the beginning of the client relationship and annually thereafter. It must disclose how the firm stores, and handles and disseminates client information. Privacy Policy Statements are built to your firm’s specifications and designed to meet SEC requirements.
  • Code of Ethics
    • Code of Ethics filing ensuring that you meet the standards of the SEC.

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Note: RIA in a Box LLC is not a law firm, investment advisory firm, or a CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities as this information should not be relied upon as currently accurate. This information is provided for educational purposes only and is not an exhaustive list of regulatory requirements.