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Explain the investment advisor registration process? How do I become a registered investment advisor (“RIA”)?

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Currently there is a significant difference between registering as an investment advisor with the SEC and individual state securities regulators.

Firms registering as investment advisors with the SEC must prepare and file the Form ADV Part 1A and its applicable schedules through the IARD system. The SEC will then review the Part 1A and approve/deny the investment advisor registration application of the firm. While the SEC generally reviews only the Part 1A as part of the initial application process, an investment advisor firm must have a Form ADV Part 2, client agreements, written supervisory programs/code of ethics, and other regulatory documents up and running upon its investment advisor registration approval by the SEC. The SEC will review such documents during a regulatory examination of the investment advisor firm.

Click here to view a recording of our compliance consultant summarize the process for registering with the SEC as an investment advisor.

In addition to filing the Form ADV Part 1A, 1B and applicable schedules through the IARD system, state registered investment advisor firms must also submit several documents directly to state securities regulators. These documents include the firm’s Form ADV Part 2A, 2B and Appendix 1 (if applicable); required financial statements; client agreements; and other supplemental documents and forms particular to the individual state securities regulator.

Click here to view a recording of our compliance consultant provide an overview of the process for registering with a state securities regulator as an investment advisor.

The SEC has a regulatory requirement to approve or deny investment advisor applicants within 45 days of the firm’s initial filing. Most state securities regulators have very similar time periods usually between 30 and 45 days. However, many times the approval process for investment advisory applicants can last longer than this time frame, depending on several factors. If a firm’s initial application packet is incomplete, delays usually occur. Many state securities regulators will also require changes to an investment advisory document or request additional information regarding the firm’s background and/or investment advisory services.

Once a securities regulator is satisfied with the information provided and the investment advisor applicant and its principal’s background, the firm will be approved.

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