General Overview of the SEC and State RIA Registration Process
- 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 in the relevant state(s)
In order to file a registered investment advisor application with the SEC or a state, 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 RIAs and their representatives). While RIA’s are in no way regulated or supervised by FINRA, the SEC and states use FINRA’s WebCRD/IARD system to process applications.
The Form ADV Part 1 is the online 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).
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 and states require that the ADV Form 2A be written in “plain English” and easily understood by your clients.
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 including an investment policy statement that meets the appropriate regulatory authority standards for client advisory contracts.
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 Advisor Representatives. It also houses your Firm’s Business Continuity Plan, Anti-money Laundering Policy, and Anti-insider Trading Policy.
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 or state requirements.
