Did you know that most state securities regulators require paid solicitors of registered investment advisor firms to license as investment advisor representatives? This means that the solicitor must either establish his/her own registered investment advisor or license under an existing registered investment advisor. From the solicitor’s perspective it is far easier to simply license under an existing registered investment advisor rather than forming a new registered investment advisor. However, what does that mean for the existing registered investment advisor holding the solicitor’s investment advisor representative license?
When a solicitor is licensed as an investment advisor representative under a registered investment advisor, the registered investment advisor becomes much more responsible for the investment advisory activities of the solicitor. The relationship moves away from a due diligence requirement to a supervision requirement. A registered investment advisor must treat all licensed investment advisor representatives, even those that are just solicitors, as supervised persons for purposes of the firm’s compliance policies and procedures and code of ethics. Therefore, in addition to ensuring compliance with the SEC’s solicitor rule, the solicitor must follow the firm’s written compliance policies and procedures including the firm’s code of ethics. The registered investment advisor must establish reasonable policies and procedures designed to properly supervise its licensed solicitors. These procedures could include training events, advertising limitations, and monitoring the actual services provided by the solicitor.
If your firm has an active solicitor program, is considering such a program or if you just want to learn more about SEC Rule 206(4)-3, please join us for our August 19 webinar titled “Establishing & Supervising Solicitor Arrangements”. This timely webinar is being presented by Jarrod James, Vice President and Senior Compliance Consultant at RIA Compliance Consultants, Inc. The cost of the webinar is $59.95 and will detail the requirements of Rule 206(4)-3, discuss best tips for complying with the rule and provide opportunity for attendees to pose specific questions. We will be examining the differences between affiliated and unaffiliated solicitors and the ramifications of holding licenses of solicitor-only investment advisor representatives.
Purchase your webinar seat now: https://www2.gotomeeting.com/register/673425275
*The webinar has been accepted by the CFP Board for 1 hour of General CFP® continuing education credit.
Posted by Bryan Hill