A person or firm that, for compensation, is engaged in the act of providing advice, making recommendations, issuing reports or furnishing analyses on securities, either directly or through publications.

This can vary by state but the Uniform Securities Act defines it as: “An individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer, or negotiate for the sale of or for selling investment advice, or supervises employees who perform any of the foregoing.

An IAR is an individual who registers to do business under an entity, the RIA (firm).

Traditionally, an IAR must successfully complete the Series 65 examination. However, there are often exceptions to this rule. If an individual currently holds and maintains in good standing the following certifications, most states will waive the passing of the Series 65. Those include:

• Certified Financial Planner (CFP)
• Chartered Financial Consultant (ChFC)
• Chartered Financial Analyst (CFA)
• Personal Financial Specialist (PFS)
• Chartered Investment Counselor (CIC)

Generally, the following applies:

• Firms with more than $100 million reported assets under management must register with the SEC.
• Firms with less than $100 million reported assets under management must register with the state(s) in which they operate.

Yes, it is advisable to establish an entity such as a corporation or an LLC prior to submitting your RIA application. It is important to consult with legal counsel and a tax professional to find out what protection you are offered as an owner of an entity from general liability that does not protect a securities principal from liability under the applicable state and federal securities laws.

Yes. Often regulators will want to see the corporate documents (i.e. articles of incorporation, articles of organization) be included with the other documents at the time of filing.

As an SEC registered firm you do not have to register with a state. However, a SEC registered firm will have to notice file, or claim an exemption, within each state where it conducts business.

RIAs are required to be registered with applicable state regulators if the firm has a physical place of business and/or if the firm has more than five clients in that state. Some states require you register even if you have only one client. Often the process for an additional state is the same as that of the home state where the RIA was established.

A Form ADV 1, Form ADV 2, and Form U4 are completed and filed through FINRA’s Web IARD/CRD.

On these forms the RIA must disclose the services that they intent to offer, the fees and costs of the aforementioned services, any third party associations and fees associated with that solicitation, the background information of the principal(s) and IARs, other business activities, any conflicts of interest, amongst many others.

To draft and prepare the documents associated with registering as an RIA and an IAR, it can take approximately one to two weeks to draft all documents, provided prompt responses are received from the applicant. Once the application material is completed, it will then be submitted to the state or SEC for review. It typically takes between four and six weeks for initial review at which point a deficiency letter will be issued, responded to, and finally approval be denied or granted. Certain circumstances and/or deficiencies can delay the registration process. These may include, but may not be limited to, any disciplinary history and any past or pending regulatory investigations.

The SEC and states each have their own applicable fees that can vary significantly. It is best to contact your specific state regulator to obtain fee estimates.

Annually. The renewal is based on the calendar year and all renewal fees are paid via the IARD/CRD system. The renewal process generally begins in mid-November of each calendar year. If the RIA does not renew in a timely fashion, their registration may be withdrawn, suspended, or revoked.

Firms that are registered at the state level are more than likely subject to these requirements. The amount of the net worth/capital or bond requirements is dependent on each individual firm’s offered services and also the state in which they are domiciled. If a firm is unable to meet the requirement(s), the state(s) may allow a surety bond to be purchased in lieu of the net worth/capital requirement. Not all states have the same requirements. It is best to check with your home state regulators to determine what the state requirements are and if the firm is affected by such requirements. For firms that are SEC registered there are no net worth/capital or bonding requirements. The SEC will, however, look at the financial condition of the firm. It is important that the firm keep complete and accurate financial records. These should be kept as part of the investment advisor’s books and records. Most states require similar financial records be kept.

Traditionally, an IAR wishing to register with an RIA must successfully complete the Series 65. However, there are often exceptions to this rule. If an individual currently holds and maintains in good standing the certifications listed below, most states will waive the passing of the Series 65. Those include:

• Certified Financial Planner (CFP)
• Chartered Financial Consultant (ChFC)
• Chartered Financial Analyst (CFA)
• Personal Financial Specialist (PFS)
• Chartered Investment Counselor (CIC)

Additionally, if an individual has successfully completed the Series 7 and Series 66 and maintained both licenses with a registered broker-dealer, most state regulators will not require successful completion of the Series 65. Although rare, state regulators may consider, on an individual basis, a waiver request from taking the Series 65 if an individual can evidence substantial proof, securities-related work history, and rationale defending your request.

No, there are no prerequisites for taking the Series 65.

No, an individual does not have to be affiliated with a RIA to open a test window or to actually take the Series 65 exam. Note: If an individual is currently a registered representative with a broker-dealer and wants to take the Series 65, the individual must go through the broker-dealer.

Usually, yes. Most state regulators will require an individual to retake the Series 65 exam if two years has lapsed since they were last registered as an IAR.

Each state has their own definition of what constitutes IAR activity. Often, soliciting on behalf of an RIA does, therefore, registration via the Series 65 or otherwise, would be required. It is the obligation of the solicitor to contact the applicable state(s) for accurate requirements of whether registration is needed.

Depending on an individual’s efficiency while studying, experience in the securities industry, and one’s knowledge with investment adviser laws, it can be anticipated that as much as 40-60 hours will be needed to prepare for the exam.

To comprehensively and effectively study for the Series 65 exam it is recommended that one obtain well-rated materials which include books, practice tests, and audio recordings. Some individuals prefer to also use an online program to study for the test or some hire a tutor or take a class on the specifics of the Series 65 exam material. Whichever method or materials are used, it is wise to take thorough notes from each section and then take the quizzes for each. Before moving on, make sure that the results of the quiz for each section show that you fully and completely grasp the content of the section. Always review the previous section before moving on to the others. If you have scored well on the practice test (85% or higher) after final review of your study material and while the information is fresh in your mind, you should schedule and take the actual test as soon as possible. Your chances of successfully passing the Series 65 will be better.

The Series 65 covers numerous topics, including:

• Economic factors and business information
• Retirement planning
• Investment vehicle characteristics
• Client investment recommendations and strategies
• Managing portfolios
• Laws, regulations and guidelines
• Fiduciary duties

If you do not pass the exam you need to wait at least 30 days from the previous test date before you may sit for it again. This also applies if you fail on your second attempt. It would be after failing to pass on the third attempt that you need to wait 180 days before you can sit for the exam again. Note: Each time you have to retake the exam, a new window must be opened.

Passing the test is the first step in registering as an IAR. Upon successful completion of the test the registration process can begin. The appropriate paperwork (e.g. Form U4) has to be submitted to the state regulators in the state(s) that you will be acting as an IAR. A fee is charged to file and submit the U4, but that varies from state to state. The fee must be paid prior to filing. Also, some states require additional documents be submitted at the time of filing (i.e. fingerprint cards).